High Court May Limit the Reach of the Wire Fraud Statute

On Dec. 9, 2024, the Supreme Court will hear argument in Kousisis v. United States, O.T. 2024, No. 23-909, a case that will again review the reach of the federal mail and wire fraud statutes. These “property fraud” statutes have long been among the favorite tools of federal prosecutors investigating white-collar crime and have also been the subject of repeated limitation by the Supreme Court. At issue this time is the so-called “fraudulent inducement” theory of property fraud — namely, whether deception to induce a commercial exchange can constitute mail or wire fraud, even if the infliction of economic harm on the alleged victim was not the object of the scheme. The Court’s grant of certiorari in a case from the Third Circuit that affirmed a conviction based on this theory suggests that it may reverse, continuing its decade-long trend of narrowing the scope of broadly worded criminal statutes (like wire fraud), and reining in the prosecutorial discretion that comes with them.