The High Court ruled that the relevant federal fraud laws do not require the government to suffer economic harm.
The U.S. Supreme Court unanimously upheld the federal conviction of a government contractor for fraudulent Pennsylvania transport program despite no financial losses.
The judge ruled that the defendant committed fraud by accepting project funds and did not respect the requirement that so-called disadvantaged companies be involved in the project. Deprived businesses are usually owned or controlled by individuals deemed socially or economically disadvantaged, such as women and racial minorities.
Stamatios Koussisis and Alpha Painting and Construction Co., the industrial succession company he helped manage, has won two government contracts for a large-scale painting project in Philadelphia, the Supreme Court opinion said.
Both contracts required underprivileged businesses to be involved in the project. Alpha told the Pennsylvania Department of Transportation (Penndot) that it would protect the materials from qualified suppliers who are disadvantaged businesses, but could not.
“Alpha and Kosisysis submitted multiple false findings to conceal their scheme. So, while Alpha’s painting work met expectations, compliance with disadvantaged business requirements was not,” the opinion states.
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Alpha and Koussisisis were charged with wire fraud. The federal government allegedly used fraud to persuade Pendot to grant a painting contract, the opinion stated.
Barrett wrote: “Under the theory of fraudulent induction, the defendant violates a contract that requires the victim to be given to a contract that requires the victim to be given to a contract that requires the victim to be given to a contract that requires the victim to be given to the contract that requires the victim to be given to the contract that requires the victim to be given to the victim,” he wrote.
“We must determine whether this theory is consistent with (section) 1343 (of the federal fraud law). “Yes, so we assert.
“The wire fraud law is agnostic about economic losses. The statute is not so much to mention losses, let alone demanding it. Instead, the defendant violates by planning to “acquire” the victim’s “money or property” whether or not they attempt to make the victim economically worse,” the opinion states.
Judge Sonia Sotomayor presented an agreed opinion, saying that the Supreme Court is right to reject Kusisis and Alpha’s request to “port economically lost requirements to federal copyright fraud laws.”
“It’s not a defense to say that the delivered items have equal economic value when the accused deceives the victim from their own money by committing one thing and offering something substantially different,” Sotomayor wrote.
The Supreme Court upheld the ruling of the US Court of Appeals for the Third Circuit, which upheld the conviction.
Under the Property Fraud Act, “it can harm the interests of traditional property, and if someone pays for something to get the full economic value of that bargain, our position is not that harmful,” Fisher said.
Meanwhile, the government asked the Supreme Court to “take a different path,” finding that “the profits of property… are harmful to property fraud cases whenever someone gives money according to fraudulent misrepresentation.”
The view violates legal precedents and is inconsistent “with the historical origins of fraud,” the lawyer said.
“Government theory doesn’t have scope,” Fisher said. “Every day across the country, people use white lies, swelling and other unfair promises to induce people to enter into transactions. But there is no fraud if there is no harm that occurs in those transactions.”
