Wire fraud charges are a go-to weapon for federal prosecutors. “Wires” include nearly all forms of electronic communication, and a single criminal charge can lead to a 20-year sentence. One of the few limits on prosecutorial power is the definition of fraud—a scheme to deprive someone of “traditional property interests.” But prosecutors are pushing to expand this definition, turning every state-law breach of contract into a federal fraud case.

Federal agents are now targeting Stamatios Kousisis, a contractor who repaired bridges in Pennsylvania. He won his contracts by bidding millions less than his competitors, and he delivered indisputably high-quality work. Yet, he now faces felony fraud charges in federal court. Prosecutors admit that his case “has nothing to do with dollars and cents.” Instead, his alleged crime was failing to fully comply with Pennsylvania’s affirmative action rules for minority-owned subcontractors.

Affirmative action requirements are not “traditional property interests” protected under fraud statutes. Typically, a state would seek administrative remedies or file a civil lawsuit to recover compensation following a contractual breach. However, in this case, the federal government devised a “fraudulent inducement” theory of property fraud to secure criminal convictions.

Under this theory, whenever someone fails to fulfill a material contractual provision, they are considered to have “fraudulently induced” the other party into payment. Notably, this theory permits convictions even when the contractor has delivered all economically valuable services at a fair price. The Third Circuit Court of Appeals adopted the government’s position, ruling that noncompliance with affirmative action goals constituted fraud. Now Cato, the Due Process Institute, and the National Association of Criminal Defense Lawyers have submitted a brief urging the Supreme Court to review the Third Circuit’s decision.

Our brief explains why the government’s theory disregards statutory text and why it would improperly extend federal law beyond its intended scope. First, the government’s argument contradicts Congress’s clear directive that fraud statutes apply only to schemes that deprive victims of “money or property” through false pretenses. The Supreme Court has repeatedly rejected efforts to treat intangible rights—such as rights to information or control—as traditionally protected property interests. While these intangible rights may influence property, they are not themselves property rights.

This distinction is deliberate: Congress never intended federal fraud statutes to be tools for punishing any behavior that fails to meet contractual expectations. The government’s expansive theory undermines this careful limitation, effectively allowing any intangible interest referenced in a contract to serve as grounds for federal prosecution.

Second, adopting the government’s theory would improperly expand federal authority at the expense of state sovereignty, fair notice, and the rule of law. Contractual disputes have traditionally been handled by state law, which is better equipped to tailor appropriate remedies for specific harms. Allowing aggrieved but influential parties to threaten contractors with severe criminal penalties—potentially decades of imprisonment—would disrupt these established remedial frameworks.

This danger is amplified by the sheer number of contractual provisions that could potentially trigger criminal prosecution. For example, the contract at issue in this case spanned over 1,000 pages and contained thousands of potentially “material” provisions. Ordinary citizens cannot reasonably anticipate facing decades of imprisonment for violating vague or ill-defined contractual terms. Accepting such an expansive view of fraud law would leave citizens vulnerable to arbitrary federal prosecution whenever prosecutors identify a breach of contract.

The Supreme Court should take this case and reject this expansive interpretation of fraud to preserve fair notice, state authority, and clear boundaries between criminal and contractual disputes.