Fraud Without Financial Injury
If a liar lies to induce someone into a deal and the other person suffers no monetary loss, is it still a fraud? Yes, under the federal “wire fraud” statute, the U.S. Supreme Court decided today in Kousisis v. United States, No. 23-909. The high court was unanimous as to that basic rule, but there were some disagreements on scope and the underlying issue in the fraudulent inducement.
The Pennsylvania Dept. of Transportation needed some restoration work done, and the federal government was picking up part of the tab. Federal regulations required a “disadvantaged-business program.” Kousisis represented that he would obtain painting supplies from a “disadvantaged” business, but that business was just a pass-through that got paid a fee for processing paperwork for supplies actually purchased elsewhere.
So PennDOT got the services it paid for, but it didn’t get the boost to supposedly disadvantaged business that was expressly made a material term of the contract. Is that fraud? Of course. Regardless of what one thinks of such clauses in government contracts, it was part of the deal. In order to get money, Kousisis made a fraudulent inducement on a term that was material to the other party, and that is all the law requires.
So where is the disagreement? Continue reading . . .