Court upholds federal fraud conviction even without economic harm
The Supreme Court on Thursday upheld the fraud conviction of a Philadelphia-area government contractor. Stamatios Kousisis was found guilty, along with Alpha Painting and Construction, after they failed to comply […]
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The Supreme Court on Thursday upheld the fraud conviction of a Philadelphia-area government contractor. Stamatios Kousisis was found guilty, along with Alpha Painting and Construction, after they failed to comply with a contract provision intended to promote diversity. Prosecutors insisted that federal wire fraud laws apply equally to cases in which the defendant uses deception to enter into a transaction that doesn’t harm the victim financially. On Thursday, the justices agreed.
The court in recent years has resisted what it sees as the federal government’s overly expansive readings of federal fraud laws, so Thursday’s decision was a relatively rare victory for federal prosecutors in that area.
Kouisisis, Alpha, and their business partners won contracts on two major construction projects in the Philadelphia area: a bridge over the Schuylkill River and repairs at Amtrak’s 30th Street Station. As part of the contracts, they were required to work with “disadvantaged business enterprises.”
Alpha indicated that it would use a paint supplier, Markias, that was a DBE. But Markias was merely a pass-through that did not supply any paint to the projects. Instead, other suppliers sent Markias invoices; Markias then added a small mark-up and sent its own invoices to Alpha.
Alpha and Kousisis were indicted on federal wire fraud charges. The government relied on a theory known as “fraudulent inducement” – the idea that Kouisisis and Alpha obtained the contracts by making deceptive promises to use a disadvantaged business enterprise. …”
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Pardon incoming?