Kousisis v. United States

Stamatios Kousisis and his painting company, Alpha Painting and Construction Co. (Alpha) (defendants) bid on two multimillion-dollar contracts to provide painting services to Pennsylvania. Both contracts required the contractor to subcontract a certain percentage of the work to businesses that qualified as disadvantaged businesses under state law. In their bids, Kousisis and Alpha promised to satisfy this requirement by purchasing painting supplies from a disadvantaged business. Pennsylvania awarded the contracts to Kousisis and Alpha. The contracts stated that compliance with the disadvantaged-business requirement was a material term and that failure to comply could result in termination. However, Kousisis and Alpha actually purchased their paint supplies from businesses that did not qualify as disadvantaged and created a misleading paper trail, including submitting false certifications, to make it appear that they had complied with the requirement. Alpha otherwise performed the painting services as promised. Kousisis and Alpha were charged with the federal crime of wire fraud under the theory that their deception had fraudulently induced Pennsylvania to award them the contracts. Kousisis and Alpha argued that they had not committed wire fraud because (1) fraudulent inducement alone, without resulting economic harm, was insufficient to establish the crime of wire fraud and (2) the state had suffered no economic harm because Alpha provided the painting services it had promised. Kousisis and Alpha were convicted of wire fraud, and the United States Court of Appeals for the Third Circuit affirmed the convictions. The United States Supreme Court granted certiorari.