Stone v. Donovan
72 F. Supp. 3d 186
D.D.C.2014Background
- In 2005 Stone pled guilty in the N.D. Tex. to tax evasion and conspiracy to steal from an organization receiving federal benefits; he was sentenced to two years, restitution, and forfeiture; the Fifth Circuit affirmed.
- Stone’s nonprofit participated in HUD’s Single Family Affordable Housing Program (SFAHP); discounts on program homes allegedly totaled over $150,000.
- Stone invoiced his nonprofit for unperformed repairs, increasing reported expenses and enabling inflated sale prices; he used proceeds to buy a yacht and condo.
- Stone repeatedly sued to recover restitution and seized property; prior suits in this district were dismissed for lack of sovereign-immunity waiver and as improper collateral attacks.
- In this action Stone contends HUD suffered no loss and thus the SFAHP discounts are not “benefits” under 18 U.S.C. § 666, so restitution and conviction were improper; HUD (Secretary) moved to dismiss for lack of jurisdiction and failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stone can relitigate § 666 elements to recover restitution | Stone: FOIA responses show HUD suffered no loss; without loss SFAHP discounts are not federal “benefits” over $10,000 | Secretary: Claims are precluded by prior rulings (Fifth Circuit and D.D.C.) and sovereign immunity bars relief | Dismissed: res judicata and prior decisions foreclose relitigation; sovereign immunity also bars suit |
| Whether prior Fifth Circuit decision precludes the claim | Stone: § 666 element challenge not adequately resolved | Secretary: Fifth Circuit already rejected the merits of the same § 666 challenge | Dismissed: Fifth Circuit decision in Hildenbrand is res judicata on the merits |
| Whether suit against Secretary in official capacity avoids prior HUD dismissal | Stone: suing the Secretary raises distinct claims | Secretary: official-capacity suit is equivalent to suit against HUD and thus precluded | Dismissed: official-capacity suit treated as suit against the entity and barred by res judicata |
| Whether sovereign immunity has been waived to allow this suit | Stone: jurisdiction under § 1331 and MVRA provides basis for relief | Secretary: § 1331 does not waive sovereign immunity; MVRA does not waive immunity for such suits | Dismissed: no waiver of sovereign immunity established |
Key Cases Cited
- United States v. Hildenbrand, 527 F.3d 466 (5th Cir. 2008) (rejecting argument that SFAHP discounts are not federal “benefits” for § 666)
- Stone v. Holder, 859 F. Supp. 2d 48 (D.D.C. 2012) (holding government did not waive sovereign immunity for Stone’s claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 12(b)(6) motions)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (plaintiff bears burden to establish subject-matter jurisdiction)
- Kentucky v. Graham, 473 U.S. 159 (1985) (official-capacity suits are treated as suits against the entity)