The Supreme Court Just Expanded the Meaning of Fraud—Even When No One Loses a Dime

By ruling against two Pennsylvania contractors Friday, the U.S. Supreme Court didn’t just resolve a circuit split over the federal wire fraud statute. It redefined how fraud itself can be prosecuted, even when there’s no financial victim.

In Kousisis v. United States, the Court held that misrepresentations used to induce a financial transaction can still be the basis for a criminal fraud conviction, even when the government suffers no economic loss. That seems remarkable. It means that intent to deceive alone, even without an intent to deprive anyone of any money or services, may be enough for prison time. Think about job applications and resumes.

At the heart of the case were two painting contracts awarded to Alpha Painting and Construction Co. by the Pennsylvania Department of Transportation (PennDOT). As required under federal regulations, Alpha pledged that it would use a certified minority-owned business, Markias Inc., to supply materials. That was a lie. Markias was a pass-through; the real work was done by others. Alpha made over $20 million on the jobs, and PennDOT got the work it wanted. Still, the government charged Alpha’s manager, Stamatios Kousisis, with wire fraud under 18 U.S.C. §1343, arguing that he obtained money through false pretenses. A jury agreed. The question before the Court was whether fraud without financial injury could still be prosecuted as a crime.

The Court, in a 7–2 decision by Justice Barrett, said yes. Fraud, they held, is about wrongful acquisition, not just economic harm. Deception-induced transactions violate the statute even when the deceived party gets what it paid for. “Fraudulent inducement has long been considered a species of actionable fraud,” Barrett wrote. Even if the government received full value, what mattered was that it was tricked into the contract in the first place.

The majority contends that the ruling aligns with historical tort doctrine: at common law, courts often allowed rescission of contracts based on fraud, even without monetary loss. And, as Barrett noted, the wire fraud statute never says anything about economic loss, it simply requires a scheme to obtain money or property through deceit.

Justice Gorsuch wasn’t so sure. While concurring that this particular defendant should be held accountable, he warned that untethering fraud from financial injury risks turning the statute into “a weapon for punishing victimless crimes.” That warning may not have been aimed at anyone in particular, but it certainly echoes arguments raised in former President Donald Trump’s civil fraud trial in New York.

In that case, Trump was accused of fraudulently inflating the value of his assets to secure favorable loan terms. Like Alpha Painting, he argued there were no victims: the banks got repaid, the deals worked, and no money was lost. And yet, a court found Trump liable anyway.

The parallel is striking. Both cases hinge on the premise that fraud can occur even when there’s no financial harm. In both, the defense pointed to the absence of injury; and in both, the courts said that didn’t matter.

But Kousisis may prove even more consequential, not for what it decided, but for what it didn’t. Justice Thomas, like Gorsuch agreed with the outcome in this case, but did not agree with all aspects of the reasoning. Specifically Justice Thomas took aim at the materiality of the misrepresentation – i.e. was the falsehood significant enough for the public to care about? In his view, it was questionable whether failing to use a “disadvantaged” business actually mattered to the core of the contract. After all, the work was completed and done well. Thomas went further, casting doubt on whether the federal affirmative action program at issue here was even Constitutional; indicating that a contract term that requires unconstitutional conduct may make the term immaterial. In essence he argues that that it would be perverse to convict a person for not engaging in unconstitutional conduct. This may foreshadow future challenges to minority contracting requirements.

Yet materiality was never contested at trial in this case, so the majority of the Court dodged it. That omission leaves defense lawyers a playbook going forward: argue that the lie was immaterial. It’s a subtle but important shift. Prosecutors may now lean on fraudulent inducement to charge conduct that would have once been considered effectively inconsequential. And with a politicized prosecutor’s office that could be a real problem. But if the defense can show that the misrepresentation didn’t go to the “essence of the bargain,” they may still prevail.

Still, the big takeaway is this: The Supreme Court just confirmed that you can commit criminal fraud without cheating anyone out of a dime.