In a unanimous decision handed down on May 22, 2025, the U.S. Supreme Court fundamentally reevaluated the requirements for proving fraud under federal wire and mail fraud statutes in the case of Kousisis v. United States. Legal practitioners must now pivot their understanding of these offenses, as the court dispensed with the need for demonstrating a net economic loss to the victim, instead underscoring the relevance of the fraudster’s misrepresentations being material.
This interpretation aligns with the court’s stance that the object of the fraud is critical, not just the economic damage inflicted. In Kousisis, the conduct in question involved the false representation of using a disadvantaged business, which played no role in causing net harm to the victim but was nevertheless part of a scheme to deceitfully obtain state contracts. Justice Amy Coney Barrett, writing for the majority, emphasized that the statute merely requires obtaining money or property, not necessarily causing loss.
Materiality emerged as a central axis around which fraud claims will revolve post-Kousisis. This focus assesses if the misrepresentation influenced the victim’s decision-making regarding the transaction. The court pointed to the ambiguity surrounding what qualifies as material and avoided pinning down a precise definition, a task now left to lower courts and future litigation. The decision referenced prior case law, such as Carpenter v. United States and Shaw v. United States, where the court had previously ruled that fraud need not result in a financial loss.
The Supreme Court’s approach parallels a move towards an “essence-of-the-bargain” test, influenced by Universal Health Services, Inc. v. United States ex rel. Escobar, which involves determining whether misrepresentations impact the core of the transaction. This requires evaluating whether the deceit was significant enough to influence a reasonable person’s decisions within the transaction.
For legal professionals, while Kousisis relieves the burden of proving economic harm, it necessitates a renewed focus on asserting what misrepresentations constitute materiality in fraud cases. The implementation of this standard will influence both government prosecutors’ strategies and defense stances. The outcome of such deliberations remains to be seen in subsequent court challenges as the lower courts begin grappling with this nuanced requirement.
For more detailed analyses of the implications of this decision, refer to the SCOTUSblog’s full article on the case.