Editor’s Word: PCCE has been following the Supreme Courtroom’s current determination in Kousisis v. United States, which, not like current circumstances narrowing the scope of white collar crimes, seems to have expanded the attain of the federal mail and wire fraud statutes. On this publish, PCCE invited main white collar practitioners to debate the implications of the Courtroom’s determination.
Left to proper: Robertston Park, Alexandra Marinzel, Helen Cantwell, Winston Paes, and Mark Krotoski (images courtesy of the authors)
by Robertston Park and Alexandra Marinzel
Previous to Kousisis, current Supreme Courtroom choices had restricted the attain of fraud statutes, main many commentators to invest that the Courtroom’s limiting development would proceed right here. Nevertheless, in a uncommon unanimous determination, the Courtroom went within the different course and held {that a} conviction beneath the federal wire fraud statute does not require a displaying of financial loss. Whereas at floor degree, Kousisis seems to buck the Courtroom’s current development, a cautious studying of the bulk opinion and the separate concurring opinions authored by Justices Thomas and Gorsuch point out that the Courtroom’s holding might effectively have been completely different if not restricted to the slender subject of pecuniary loss. Certainly, the concurring opinions learn extra like dissents than concurrences.
As famous in Choose Barrett’s majority opinion, the events didn’t dispute the materiality of the defendants’ false representations about contracting with a deprived enterprise enterprise (“DBE”), and due to this fact, the Courtroom didn’t analyze materiality additional than to say “that materiality of falsehood is a component of – and thus a restrict on – the federal fraud statutes.” In his concurrence, Justice Thomas expressed important doubt that the defendants’ false representations had been materials, and even questioned the constitutionality of the statute creating the DBE requirement in US Division of Transportation contracts. Clearly, he would have dominated in another way had materiality been at subject. Justice Gorsuch famous that the query introduced was a slender one, and took severe subject with footnote 5 within the majority opinion, suggesting that it improperly threatened to upend the widespread legislation harm requirement essential to maintain a fraud conviction. Justice Gorsuch additionally raised strongly worded considerations in regards to the potential over-criminalization of innocent lies and the creation of so-called morality police.
So whereas the justices agreed on the difficulty of financial loss, their settlement seems to cease there. Accordingly, it appears unlikely that Kousisis represents a reversal within the Courtroom’s efforts to slender the scope and attain of fraud statutes, and slightly displays solely a slender holding on a slender query.
Robertston Park is a Companion and Alexandra Marinzel is Of Counsel at Davis Wright Tremaine LLP.
by Helen Cantwell and Winston Paes
The Supreme Courtroom’s determination in Kousisis comes on the heels of DOJ’s announcement establishing a brand new Civil Rights Fraud Initiative. The Initiative, introduced by Deputy Lawyer Common Todd Blanche, goals to implement the False Claims Act (“FCA”) in opposition to federal contractors and recipients of federal funds alleged to have knowingly violated civil rights legal guidelines, if DOJ determines that these recipients’ certifications are inconsistent with their approaches to antisemitism, gender identification points, and variety, fairness, and inclusion (“DEI”) packages. It stays to be seen whether or not DOJ will use the Kousisis determination to bolster the Initiative by claiming that misrepresentations in certifications by federal funds recipients and federal contractors additionally violate the prison wire fraud statute, a statute that has in recent times been considerably circumscribed by the courts.
To deliver costs beneath both the prison wire fraud statute or the civil FCA, any alleged misrepresentation or false certification must be materials. As a result of the defendants didn’t contest the materiality of their misrepresentations, the Kousisis majority didn’t straight tackle this requirement or whether or not it differs for wire fraud costs and FCA claims. However, in separate concurrences, Justice Thomas and Justice Sotomayor outlined two completely different views of materiality that counsel completely different potential implications for DOJ. In keeping with Justice Thomas, though the contracts at subject in Kousisis explicitly required subcontracting a sure proportion of the full contract to a “deprived enterprise,” misrepresentations about compliance with this requirement weren’t materials as a result of they didn’t go to the “essence of the cut price”—the materiality customary for FCA claims—for the reason that contracts “had been for bridge repairs, not minority hiring.” Though Justice Thomas didn’t specific a “definitive view” about whether or not the materiality customary is similar for wire fraud and the FCA, he indicated that courts must be significantly reluctant to presume the materiality of provisions in authorities contracts. It is because the federal government might embody in its contracts political or regulatory necessities which can be “unrelated to the contracts’ core objective” to “obtain coverage objectives by leveraging its unmatched bargaining place.” In contrast, in her concurrence, Justice Sotomayor discovered the identical misrepresentations materials beneath the “essence of the cut price” take a look at. In Justice Sotomayor’s view, the defendants had promised to supply restore providers that complied with the Deprived Enterprise Enterprise (“DBE”) program after which delivered one thing materially completely different by offering restore providers that didn’t adjust to that program. This was as a result of DBE compliance “featured prominently” within the contracts and bidding course of, and since failure to adjust to the DBE program might yield “severe authorized penalties[,]” together with an enforcement motion or the suspension or termination of federal funds.
Contemplating the goals of the Initiative and DOJ’s acknowledged intention to make use of it to incentivize universities and firms to stick to the Trump administration’s coverage priorities, these two concurrences might show politically counterintuitive. Particularly, beneath Justice Thomas’s method, the materiality requirement would function a extra sturdy restrict on the federal government’s capability to deliver costs in opposition to federal funding recipients who certify compliance with federal civil rights legal guidelines however preserve DEI packages or different disfavored insurance policies. Conversely, Justice Sotomayor’s method lowers the bar on materiality, offering DOJ with extra leeway to deliver such circumstances. Provided that the Kousisis majority didn’t attain the query of materiality, it isn’t but clear whether or not DOJ will undertake Justice Sotomayor’s decrease customary of materiality for misrepresentations in certifications for federal funding because it embarks on implementing the objectives of the Initiative, and whether or not the courts, in an effort to curb any overreach by DOJ, will embrace Justice Thomas’s larger materiality customary.
Helen Cantwell and Winston Paes are companions at Debevoise & Plimpton LLP. Sofia Squatriti Muno and Raquel Leslie, associates on the agency, contributed to this observe.
A central query continues to concentrate on the bounds to federal prison prosecution beneath the wire and mail fraud statues significantly the place civil cures might apply. The Supreme Courtroom famous a previous concern a few prosecution that “criminalizes historically civil issues and federalizes historically state issues.”[1] Over current years, the Supreme Courtroom has narrowed the scope of the federal fraud statutes and what many check with because the overcriminalization of the mail and wire fraud statutes.[2] When the Supreme Courtroom granted certiorari overview in Kousisis v. United States, No. 23-909, one query was whether or not the narrowing development would proceed.[3]
On Could 22, 2025, the Supreme Courtroom issued its opinion.[4] The holding is a slender one, restricted to construing the money-or-property requirement beneath the wire fraud statute which was “on the coronary heart of this dispute.”[5] In resolving a circuit cut up, the Courtroom centered on “a selected species of fraud: deliberately mendacity to induce a sufferer right into a transaction that may price her cash or property.”[6] The Courtroom held, “The fraudulent-inducement principle is in step with each the textual content of the wire fraud statute and our precedent deciphering it.”[7] Nevertheless, as Justice Sonia Sotomayor clarified in her concurring opinion, the restricted holding didn’t tackle different varieties of fraud circumstances: “The Courtroom due to this fact has no cause to opine on a category of fraudulent-inducement circumstances distinct from this one: these wherein a defendant offers precisely the products or providers that they promised to ship, however lies in different methods to induce the transaction.”[8]
When Chief Justice John G. Roberts, Jr. requested the Deputy Solicitor Common throughout oral argument, what are the bounds to the idea of prosecution superior by the federal government beneath the fraud statute, the response was the “materiality” requirement.[9] Nevertheless, the materiality ingredient was not contested within the Kousisis case.[10] Because the opinion defined, beneath this customary “a misrepresentation is materials if an affordable individual would connect significance to it in deciding the right way to proceed, or if the defendant knew (or ought to have identified) that the recipient would seemingly deem it vital.”[11] The Supreme Courtroom famous that the distinct function and performance of the materiality requirement was a “demanding” one which “considerably narrows the universe of actionable misrepresentations,”[12] and offers “the principled foundation for distinguishing on a regular basis misstatements from actionable fraud.”[13] In Kousisis, the federal government particularly requested the Supreme Courtroom to use “an essence-of-the-bargain take a look at, beneath which a misrepresentation is materials provided that it goes to the very essence of the events’ discount.”[14] This specific customary “is rigorous and context particular.”[15]
Whereas the Kousisis opinion resolved a circuit cut up on a slender subject, it highlights a broader subject that the scope of the wire and mail fraud statutes will largely activate the appliance of the materiality ingredient together with the steering given to juries in deciding this central subject. The concentrate on the scope or overcriminalization of the federal fraud statutes now shifts to the materiality requirement.
Mark Krotoski is a Litigation Companion at Pillsbury Winthrop Shaw Pittman LLP.
[1] Ciminelli v. United States, 598 U.S. 306, 143 S.Ct. 1121, 1128 (2023).
[2] See, e.g., Mark Krotoski & Anne Voigts, Excessive Courtroom May Make clear Scope of Oft-Used Wire, Mail Fraud Legal guidelines, Bloomberg Regulation (Dec. 4, 2024) (summarizing development of Supreme Courtroom circumstances), https://information.bloomberglaw.com/crypto/high-court-could-clarify-scope-of-oft-used-wire-mail-fraud-laws.
[3] Id.
[4] Kousisis v. United States, No. 23-909, 2025 WL 1459593 (Could 22, 2025).
[5] Kousisis, 2025 WL 1459593, *5.
[6] Id. at *11.
[7] Id. at *5.
[8] See id., at *22 (Sotomayor, J., concurring).
[9] Kousisis v. United States, No. 23-909, Oral Argument Transcript, at 61:1-22 (Dec. 9, 2024).
[10] See 2025 WL 1459593, *9 (noting materiality was not contested).
[11] Id. (citations omitted).
[12] Id., at *11 (citations omitted; emphasis added).
[13] Id., at *9 (emphasis added); see additionally id. at *16 (Thomas, J., concurring) (identical).
[14] Id., at *9 (citing Temporary for United States 43–45; cleaned up).
[15] Id., at *16 (Thomas, J., concurring).
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t symbolize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College Faculty of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this website and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility almost about infringement of mental property rights stays with the creator(s).
Editor’s Word: PCCE has been following the Supreme Courtroom’s current determination in Kousisis v. United States, which, not like current circumstances narrowing the scope of white collar crimes, seems to have expanded the attain of the federal mail and wire fraud statutes. On this publish, PCCE invited main white collar practitioners to debate the implications of the Courtroom’s determination.
Left to proper: Robertston Park, Alexandra Marinzel, Helen Cantwell, Winston Paes, and Mark Krotoski (images courtesy of the authors)
by Robertston Park and Alexandra Marinzel
Previous to Kousisis, current Supreme Courtroom choices had restricted the attain of fraud statutes, main many commentators to invest that the Courtroom’s limiting development would proceed right here. Nevertheless, in a uncommon unanimous determination, the Courtroom went within the different course and held {that a} conviction beneath the federal wire fraud statute does not require a displaying of financial loss. Whereas at floor degree, Kousisis seems to buck the Courtroom’s current development, a cautious studying of the bulk opinion and the separate concurring opinions authored by Justices Thomas and Gorsuch point out that the Courtroom’s holding might effectively have been completely different if not restricted to the slender subject of pecuniary loss. Certainly, the concurring opinions learn extra like dissents than concurrences.
As famous in Choose Barrett’s majority opinion, the events didn’t dispute the materiality of the defendants’ false representations about contracting with a deprived enterprise enterprise (“DBE”), and due to this fact, the Courtroom didn’t analyze materiality additional than to say “that materiality of falsehood is a component of – and thus a restrict on – the federal fraud statutes.” In his concurrence, Justice Thomas expressed important doubt that the defendants’ false representations had been materials, and even questioned the constitutionality of the statute creating the DBE requirement in US Division of Transportation contracts. Clearly, he would have dominated in another way had materiality been at subject. Justice Gorsuch famous that the query introduced was a slender one, and took severe subject with footnote 5 within the majority opinion, suggesting that it improperly threatened to upend the widespread legislation harm requirement essential to maintain a fraud conviction. Justice Gorsuch additionally raised strongly worded considerations in regards to the potential over-criminalization of innocent lies and the creation of so-called morality police.
So whereas the justices agreed on the difficulty of financial loss, their settlement seems to cease there. Accordingly, it appears unlikely that Kousisis represents a reversal within the Courtroom’s efforts to slender the scope and attain of fraud statutes, and slightly displays solely a slender holding on a slender query.
Robertston Park is a Companion and Alexandra Marinzel is Of Counsel at Davis Wright Tremaine LLP.
by Helen Cantwell and Winston Paes
The Supreme Courtroom’s determination in Kousisis comes on the heels of DOJ’s announcement establishing a brand new Civil Rights Fraud Initiative. The Initiative, introduced by Deputy Lawyer Common Todd Blanche, goals to implement the False Claims Act (“FCA”) in opposition to federal contractors and recipients of federal funds alleged to have knowingly violated civil rights legal guidelines, if DOJ determines that these recipients’ certifications are inconsistent with their approaches to antisemitism, gender identification points, and variety, fairness, and inclusion (“DEI”) packages. It stays to be seen whether or not DOJ will use the Kousisis determination to bolster the Initiative by claiming that misrepresentations in certifications by federal funds recipients and federal contractors additionally violate the prison wire fraud statute, a statute that has in recent times been considerably circumscribed by the courts.
To deliver costs beneath both the prison wire fraud statute or the civil FCA, any alleged misrepresentation or false certification must be materials. As a result of the defendants didn’t contest the materiality of their misrepresentations, the Kousisis majority didn’t straight tackle this requirement or whether or not it differs for wire fraud costs and FCA claims. However, in separate concurrences, Justice Thomas and Justice Sotomayor outlined two completely different views of materiality that counsel completely different potential implications for DOJ. In keeping with Justice Thomas, though the contracts at subject in Kousisis explicitly required subcontracting a sure proportion of the full contract to a “deprived enterprise,” misrepresentations about compliance with this requirement weren’t materials as a result of they didn’t go to the “essence of the cut price”—the materiality customary for FCA claims—for the reason that contracts “had been for bridge repairs, not minority hiring.” Though Justice Thomas didn’t specific a “definitive view” about whether or not the materiality customary is similar for wire fraud and the FCA, he indicated that courts must be significantly reluctant to presume the materiality of provisions in authorities contracts. It is because the federal government might embody in its contracts political or regulatory necessities which can be “unrelated to the contracts’ core objective” to “obtain coverage objectives by leveraging its unmatched bargaining place.” In contrast, in her concurrence, Justice Sotomayor discovered the identical misrepresentations materials beneath the “essence of the cut price” take a look at. In Justice Sotomayor’s view, the defendants had promised to supply restore providers that complied with the Deprived Enterprise Enterprise (“DBE”) program after which delivered one thing materially completely different by offering restore providers that didn’t adjust to that program. This was as a result of DBE compliance “featured prominently” within the contracts and bidding course of, and since failure to adjust to the DBE program might yield “severe authorized penalties[,]” together with an enforcement motion or the suspension or termination of federal funds.
Contemplating the goals of the Initiative and DOJ’s acknowledged intention to make use of it to incentivize universities and firms to stick to the Trump administration’s coverage priorities, these two concurrences might show politically counterintuitive. Particularly, beneath Justice Thomas’s method, the materiality requirement would function a extra sturdy restrict on the federal government’s capability to deliver costs in opposition to federal funding recipients who certify compliance with federal civil rights legal guidelines however preserve DEI packages or different disfavored insurance policies. Conversely, Justice Sotomayor’s method lowers the bar on materiality, offering DOJ with extra leeway to deliver such circumstances. Provided that the Kousisis majority didn’t attain the query of materiality, it isn’t but clear whether or not DOJ will undertake Justice Sotomayor’s decrease customary of materiality for misrepresentations in certifications for federal funding because it embarks on implementing the objectives of the Initiative, and whether or not the courts, in an effort to curb any overreach by DOJ, will embrace Justice Thomas’s larger materiality customary.
Helen Cantwell and Winston Paes are companions at Debevoise & Plimpton LLP. Sofia Squatriti Muno and Raquel Leslie, associates on the agency, contributed to this observe.
A central query continues to concentrate on the bounds to federal prison prosecution beneath the wire and mail fraud statues significantly the place civil cures might apply. The Supreme Courtroom famous a previous concern a few prosecution that “criminalizes historically civil issues and federalizes historically state issues.”[1] Over current years, the Supreme Courtroom has narrowed the scope of the federal fraud statutes and what many check with because the overcriminalization of the mail and wire fraud statutes.[2] When the Supreme Courtroom granted certiorari overview in Kousisis v. United States, No. 23-909, one query was whether or not the narrowing development would proceed.[3]
On Could 22, 2025, the Supreme Courtroom issued its opinion.[4] The holding is a slender one, restricted to construing the money-or-property requirement beneath the wire fraud statute which was “on the coronary heart of this dispute.”[5] In resolving a circuit cut up, the Courtroom centered on “a selected species of fraud: deliberately mendacity to induce a sufferer right into a transaction that may price her cash or property.”[6] The Courtroom held, “The fraudulent-inducement principle is in step with each the textual content of the wire fraud statute and our precedent deciphering it.”[7] Nevertheless, as Justice Sonia Sotomayor clarified in her concurring opinion, the restricted holding didn’t tackle different varieties of fraud circumstances: “The Courtroom due to this fact has no cause to opine on a category of fraudulent-inducement circumstances distinct from this one: these wherein a defendant offers precisely the products or providers that they promised to ship, however lies in different methods to induce the transaction.”[8]
When Chief Justice John G. Roberts, Jr. requested the Deputy Solicitor Common throughout oral argument, what are the bounds to the idea of prosecution superior by the federal government beneath the fraud statute, the response was the “materiality” requirement.[9] Nevertheless, the materiality ingredient was not contested within the Kousisis case.[10] Because the opinion defined, beneath this customary “a misrepresentation is materials if an affordable individual would connect significance to it in deciding the right way to proceed, or if the defendant knew (or ought to have identified) that the recipient would seemingly deem it vital.”[11] The Supreme Courtroom famous that the distinct function and performance of the materiality requirement was a “demanding” one which “considerably narrows the universe of actionable misrepresentations,”[12] and offers “the principled foundation for distinguishing on a regular basis misstatements from actionable fraud.”[13] In Kousisis, the federal government particularly requested the Supreme Courtroom to use “an essence-of-the-bargain take a look at, beneath which a misrepresentation is materials provided that it goes to the very essence of the events’ discount.”[14] This specific customary “is rigorous and context particular.”[15]
Whereas the Kousisis opinion resolved a circuit cut up on a slender subject, it highlights a broader subject that the scope of the wire and mail fraud statutes will largely activate the appliance of the materiality ingredient together with the steering given to juries in deciding this central subject. The concentrate on the scope or overcriminalization of the federal fraud statutes now shifts to the materiality requirement.
Mark Krotoski is a Litigation Companion at Pillsbury Winthrop Shaw Pittman LLP.
[1] Ciminelli v. United States, 598 U.S. 306, 143 S.Ct. 1121, 1128 (2023).
[2] See, e.g., Mark Krotoski & Anne Voigts, Excessive Courtroom May Make clear Scope of Oft-Used Wire, Mail Fraud Legal guidelines, Bloomberg Regulation (Dec. 4, 2024) (summarizing development of Supreme Courtroom circumstances), https://information.bloomberglaw.com/crypto/high-court-could-clarify-scope-of-oft-used-wire-mail-fraud-laws.
[3] Id.
[4] Kousisis v. United States, No. 23-909, 2025 WL 1459593 (Could 22, 2025).
[5] Kousisis, 2025 WL 1459593, *5.
[6] Id. at *11.
[7] Id. at *5.
[8] See id., at *22 (Sotomayor, J., concurring).
[9] Kousisis v. United States, No. 23-909, Oral Argument Transcript, at 61:1-22 (Dec. 9, 2024).
[10] See 2025 WL 1459593, *9 (noting materiality was not contested).
[11] Id. (citations omitted).
[12] Id., at *11 (citations omitted; emphasis added).
[13] Id., at *9 (emphasis added); see additionally id. at *16 (Thomas, J., concurring) (identical).
[14] Id., at *9 (citing Temporary for United States 43–45; cleaned up).
[15] Id., at *16 (Thomas, J., concurring).
The views, opinions and positions expressed inside all posts are these of the creator(s) alone and don’t symbolize these of the Program on Company Compliance and Enforcement (PCCE) or of the New York College Faculty of Regulation. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this website and won’t be liable any errors, omissions or representations. The copyright of this content material belongs to the creator(s) and any legal responsibility almost about infringement of mental property rights stays with the creator(s).
