Kousisis May Boost Fraud Cases, But Questions Remain

Litigation attorney Eddie Jauregui was quoted in a Law360 article reviewing the U.S. Supreme Court's decision in Kousisis v. U.S., which held that fraudulently inducing a transaction, even without the intent to cause economic loss, is a valid basis for wire fraud. The ruling upheld the use of the fraudulent inducement theory of wire fraud to convict Stamatios Kousisis and Alpha Painting & Construction Co., which had secured multimillion-dollar contracts from the Pennsylvania Department of Transportation in part by lying about satisfying a requirement for the participation of historically disadvantaged business enterprises. The outcome contrasts a series of cases that limited prosecutors' ability to wield federal fraud statutes, including 2023's Ciminelli v. U.S. in which the court found that a scheme to deprive someone of the right to valuable economic information needed to make discretionary economic decisions — the "right to control" — did not constitute property fraud. Mr. Jauregui explained that though Kousisis may seem like a departure, at its core the case "was straight up about a scheme to obtain money from the state of Pennsylvania Department of Transportation."

"There's a line in the opinion where Justice Barrett says no matter how long we stare at the plain words of the statute, we can't really get around what it says," he said. "And this seems to be a square peg fitting into a square hole."

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