Docket 23-909
Kousisis
DecidedMay 22, 2025
9-0decision
Source: CourtListener.
Federal fraud conviction can stand even when defendant provided equal-value goods or services in return
Impact6/10
What it does
The Court held that the federal wire fraud statute does not require proof that the victim suffered a net financial loss. A defendant can be convicted of wire fraud if they used a material lie to trick a victim into a contract that required the victim to hand over money or property, regardless of whether the defendant provided something of equal economic value in return. The ruling resolves a long-standing split among federal appeals courts on this question.
Who benefits
Federal prosecutors who bring wire fraud charges in cases where defendants obtained government or private contracts through false representations but delivered work that met quality expectations. Government agencies that set participation requirements — such as subcontracting mandates — as conditions of contracts funded by federal grants.
Who is affected
Contractors, vendors, and other parties who obtain government or private contracts by making false representations about how they will perform the work — even if the final work product meets the contract's quality standards. Defendants in federal fraud cases who previously argued that delivering equal-value goods or services negated criminal liability.
Practical impact
Contractors and other parties who win government contracts by making false representations about how they will perform — such as lying about subcontractor participation requirements — can now be prosecuted for federal wire fraud even if the underlying work meets quality standards and the government suffers no measurable financial loss. Federal prosecutors have a broader basis to bring fraud charges in cases involving regulatory compliance misrepresentations tied to government contracts. Lower courts must still apply a demanding materiality standard, meaning not every lie in a transaction will support a fraud conviction — only lies that a reasonable person would consider important to the decision to enter the contract.
Majority — Barrett
Joined by: Roberts, Thomas, Alito, Kagan, Kavanaugh, Jackson
The majority held that the text of the wire fraud statute does not mention economic loss and does not require it — a defendant violates the law by devising a scheme to "obtain" money or property through false representations, and money is no less "obtained" simply because something is given back in return. The Court reasoned that the common law of fraud did not establish a universal rule requiring economic loss: in contract rescission cases and prosecutions for false pretenses, courts historically found fraud complete when a victim was deceived into parting with property, even if the property received was of equal value. Because the common law was not settled on an economic-loss requirement, the Court declined to read one into the statute. The majority also emphasized that the materiality requirement — which asks whether a reasonable person would consider the lie important in deciding whether to enter the transaction — serves as the meaningful limit that separates everyday misstatements from criminal fraud. Finally, the Court distinguished this ruling from prior cases that rejected fraud theories based on intangible interests or regulatory interference, explaining that fraudulent inducement still requires money or property to be the actual object of the scheme.
Dissent reasoning
Justice Gorsuch agreed with the Court's bottom-line conclusion that the wire fraud statute does not require proof of net financial loss, but wrote separately to object to a footnote in the majority opinion that he read as going further. He argued that the majority's footnote suggests that any time a defendant's lie causes a victim to part with money or property, that alone constitutes the "injury" required for fraud — a rule he said departs from the traditional common-law standard. Under the traditional rule, Gorsuch explained, a fraud is not complete unless the victim failed to receive what they actually bargained for; merely parting with money is not enough if the victim got exactly what was promised. He illustrated the concern with examples: a babysitter who lies about her criminal record but does excellent work, or an employee who fibs on a resume but performs the job perfectly — in both cases the victim parts with money because of a material lie, yet under the traditional rule no fraud injury occurs because the victim received the benefit of the bargain. Gorsuch argued that without this traditional injury requirement, the wire fraud statute risks becoming a tool to prosecute victimless lies, and that the majority's materiality element cannot do all the work that the injury requirement has historically performed. He characterized the majority's broader statements as unnecessary to the outcome — since Kousisis lost under either rule because PennDOT did not receive what it bargained for — and labeled them non-binding dicta.
Constitutional question
Does the federal wire fraud statute require the government to prove that a defendant caused the victim a net financial loss, or is it enough that the defendant used material lies to trick the victim into handing over money or property — even if the defendant provided something of equal value in return?
Precedent changed
The ruling extends and reaffirms Carpenter v. United States (1987) and Shaw v. United States (2016), both of which had previously rejected economic-loss requirements in fraud cases, and applies that reasoning to the fraudulent-inducement context. No prior precedent was overruled.