Kousisis v. United States
Case Overview
Stamatios Kousisis obtained Pennsylvania Department of Transportation road-paving contracts by fraudulently misrepresenting that a minority-owned subcontractor was performing required work under the disadvantaged business enterprise program. The Supreme Court upheld the wire fraud convictions, holding that a defendant who obtains a government contract by misrepresenting compliance with a material regulatory condition commits wire fraud even if the completed work met technical specifications.
The Facts
Kousisis and a co-conspirator submitted false DBE compliance certifications to PennDOT, representing that a certified disadvantaged business enterprise subcontractor was meaningfully involved in the contracts. The DBE involvement was fabricated. PennDOT received paved roads meeting technical standards but did not receive the regulatory compliance it had bargained for as a material term of the contract. Kousisis argued the government suffered no financial loss because the roads were built correctly.
The Application
Kousisis fraudulently obtained PennDOT contracts by misrepresenting compliance with the disadvantaged business enterprise program, thereby deceiving the government into awarding contracts it would not have awarded otherwise. Although the completed roads met technical specifications, the government did not receive the regulatory compliance it had bargained for as a material contract condition—and that material misrepresentation constitutes the fraud, not the quality of performance. The Supreme Court rejected Kousisis's argument that adequate work product negated wire fraud liability, holding that obtaining a government contract through material misrepresentation suffices for wire fraud regardless of performance quality. This treatment of contracts as distinct property significantly strengthens prosecution of procurement and disadvantaged business enterprise fraud.
The Conclusion
**Kousisis confirms that wire fraud liability attaches when a defendant obtains a government contract through fraud as to a material condition of that contract, without requiring proof of financial loss in the narrow sense.** The ruling strengthens prosecution of procurement fraud and DBE fraud specifically, where defendants routinely argue the government received adequate work product. The decision also clarifies limits on the right-to-control theory without endorsing an expansive version of that doctrine.
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