Kousisis v. United States (23-909)

argument 23-909

Kousisis v. United States

Supreme Court of the United States 1h 26m 8 speakers 8 chapters transcribed 1 month ago official recording ↗

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What is the legal definition of property fraud under the statutes?

John G. Roberts 0:00

We will hear argument first this morning in case twenty three nine oh nine, COSISIS versus United States. Mr Fisher.

Mr. Fisher 0:07

Mr. Chief Justice, and may it please the court. The property fraud statutes require a scheme to defraud as understood at the common law. And such traditional fraud requires a scheme, if completed as devised, to harm a traditional property interest. And our position is no such harm occurs if somebody pays money in exchange for something and gets the full economic value of that bargain. The government asked this Court to chart a different path. It argues that a property interest is is harmed in a property fraud case whenever uh somebody gives money pursuant to a fraudulent uh uh uh misrepresentation. That would cause three major problems. First, it would flout decades of this court's precedent. Indeed, it would allow prosecutions just like McNally, Simonelli, the hypothetical and skilling, and others that the court has said are beyond the reach of the fraud statutes.

Mr. Fisher 1:05

Second, the theory is incompatible with the historical origins of fraud. In an 1893 case, it's representative of the time. Kansas Supreme Court said even though money is obtained by misrepresentation, if no injury occurs No crime is committed. That sentence is incomprehensible under the rule that the government argues today, which says that any time there's misrepresentation that procures money, that itself is injury. And thirdly, and perhaps most decisively, the government's theory knows no bounds. Every day across the country, uh people use white lies, puffery, and other fraudulent promises to induce people to enter into transactions. But if there's no harm uh that occurs uh In those transactions, there is no fraud.

Mr. Fisher 1:54

That's what the government, I'm sorry, that's what this court has said time and again in this court's cases, as the government has tried to concoct one theory after the other to work around that. Such misrepresentations might be a civil violation, they might be a tort violation, a contract violation, they might even be a low-level criminal violation. But the one thing this court has said time and again is that that they do not constitute property fraud because property fraud requires harm to a property interest and no such harm occurs in a case like this. I would welcome the court's questions.

Clarence Thomas 2:26

Uh beginning with the uh uh the facts in this case, uh what would give me an example of uh what would constitute fraud?

Mr. Fisher 2:36

Well, it would have constituted fraud if we had delivered uh bridge bridge bridge painting and repair services l worth less uh than we promised. So if we hadn't painted the full bridge, if we'd use less uh products of a less higher quality to deliver the project, that sort of thing, Justice Thomas. Um that would be a that would be a violation. But here uh you don't have anything like that. The government's theory, and this is at J. A. nineteen. Was that the promise here was non-financial in nature. And what the government argued to the jury is this case is not about dollars and cents. This case is about uh Pendot's programmatic interests. And I think in the court's terms, that means this case is about regulatory interest.

Mr. Fisher 3:18

And that's what the court taught in Kelly and other cases, that mere regulatory interests do not supply the basis for property.

Elena Kagan 3:24

I'm sorry, Councillor. Let's assume the example that I contract to have a certified plumber. Fix. Whatever. All right, and I don't use a certified plumber, I just use a handyman. Um but the toilet is fixed. Under your theory, even if I didn't use a certified plumber because the toilet was fixed. I got m money from I got value under the contract?

Mr. Fisher 3:55

No, I don't think so, Justice Sotomayor. There the fraud would be promising services that were more valuable. Now the certified plumber presumably would charge more per hour.

Elena Kagan 4:04

But I don't understand what the difference between that in this case is the services the government contracted for was to have a particular type of vendor

Mr. Fisher 4:15

sell

Elena Kagan 4:15

Mr. Fisher 4:15

something. But a parti well, that's not precisely right. Um I think what ha with the contract here was with Alpha Construction, and Alpha Construction then got to choose its own subsidiaries.