On May 22, the Supreme Court in Kousisis, et al., v. United States,[1] affirmed the convictions of a painting subcontractor and its owner (defendants) under the federal wire fraud statute for conspiring to defraud the Department of Transportation (DOT) and the Pennsylvania Department of Transportation (PennDOT) by exploiting the DOT’s disadvantaged business enterprise (DBE) program in connection with two Philadelphia construction projects.[2] As explained below, the Court resolved a divide among the circuits over the validity of a federal fraud conviction where the defendant did not seek to cause the victim net pecuniary loss. The Court held that where a fraudster seeks to induce the government into a transfer of its money or property, that loss is sufficient to sustain a fraud conviction, regardless of whether the government has suffered pecuniary loss.
Suppliers Beware: U.S. Government Continues Prosecution of Disadvantaged Business Enterprise Fraud Cases Involving Supplies Passed Through Disadvantaged Business Enterprises
Michael Schwartz, Kristin Jones, and John Gazzola were published in the August 2023 Pratt’s Government Contracting Law Report article, “Suppliers Beware: U.S. Government Continues Prosecution of Disadvantaged Business Enterprise Fraud Cases Involving Supplies Passed Through Disadvantaged Business Enterprises.”
A Case to Watch: Highway Contractor Appeals $663M False Claims Act Judgment
On August 31, 2015, highway contractors Trinity Industries, Inc. and Trinity Highway Products, LLC (collectively, Trinity) appealed to the U.S. Court of Appeals for the Fifth Circuit a $663,360,750 final judgment entered against them under the federal False Claims Act (FCA). At the conclusion of a six-day trial that commenced on October 13, 2014, the jury rendered a unanimous verdict, finding Trinity “knowingly made, used, or caused to be made or used, a false record of statement material to a false or fraudulent claim” in violation of the FCA. The jury unanimously found that the U.S. government suffered damages in the amount of $175,000,000 as the result of Trinity’s FCA violations.