The opinion
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
GERALD STONE,
Plaintiff,
v. Case No. 1:14-cv-00656 (CRC)
JULIÁN CASTRO, SECRETARY,
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
Defendant.
MEMORANDUM OPINION AND ORDER
This is but the latest of Gerald Stone’s numerous attempts to reverse the consequences of
his 2005 criminal conviction. Because Stone’s claims are virtually identical to ones previously
rejected by this court and others, the Court will grant the Secretary of Housing and Urban
Development’s motion to dismiss Stone’s complaint.
I. Background
The events surrounding Stone’s conviction and sentence have been amply described in
prior decisions cited in this opinion. The Court will highlight the most pertinent facts. In 2005,
Stone pled guilty in the U.S. District Court for the Northern District of Texas to tax evasion and
to conspiracy to commit theft from an organization receiving federal benefits in excess of
$10,000. United States v. Hildenbrand, 527 F.3d 466, 473 (5th Cir. 2008). A non-profit
operated by Stone and his wife, Barbara Hildenbrand, bought houses from the U.S. Department
of Housing and Urban Development (“HUD”) at a discount through a HUD program (known as
the Single Family Affordable Housing Program, or “SFAHP”) offered to encourage home
ownership among low- and moderate-income buyers. Id. at 470–71. Stone invoiced the non-
profit and received payments for repair work on houses that he did not perform. Id. at 471–72.
The fake invoices inflated the stated expenses of the non-profit, thereby increasing the allowable
sale price of the houses. Id. at 471. Stone bought a yacht and a condo with the funds, and did
not report this income on his tax returns. Id. at 471–73.
The District Court for the Northern District of Texas sentenced Stone to two years
imprisonment and restitution, and ordered forfeiture of the yacht and condo. Id. at 473–74; Plea
Agreement, at 4. The Fifth Circuit affirmed the sentence. Id. at 478. Stone’s motion to vacate
the sentence was denied by the district court. Stone v. United States, 2010 WL 2404281 (N.D.
Tex. June 15, 2010) (adopting report and recommendation). The Fifth Circuit dismissed his
appeal of the forfeiture order for lack of jurisdiction because Stone had no interest in the
forfeited property at the time the district court entered the order. United States v. Stone, 435 F.
App’x 320 (5th Cir. 2011).
After the proceedings in the Fifth Circuit, Stone brought three cases in this district against
the Department of the Treasury, HUD, and Eric Holder in his capacity as Attorney General. See
Stone v. Holder, 859 F. Supp. 2d 48 (D.D.C. 2010) (consolidating three cases). All three sought
to reclaim restitution payments and property seized as part of his sentence. Id. at 50. All three
were dismissed because Stone did not meet his burden to establish that sovereign immunity had
been waived. Id. at 52. The court also held that the suits were improper collateral attacks on
Stone’s sentence. Id. at 53.
In this complaint, Stone argues that there were no facts supporting his conviction under
18 U.S.C. § 666 for defrauding an organization receiving over $10,000 in federal benefits. See
Compl. at 3. He relies on recent responses to Freedom of Information Act requests where, he
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contends, HUD and the Department of Justice deny evidence of loss by HUD. Compl. at 6–7.1
Without a financial loss to HUD, Stone argues, the non-profit he defrauded could not have
received over $10,000 in federal benefits, as required by Section 666. Pl. Opp’n Mot. to Dismiss
at 2, 7. The Secretary moves to dismiss under Federal Rules of Civil Procedure 12(b)(1) and (6)
for lack of subject matter jurisdiction and failure to state a claim.
II. Standard of Review
Federal courts are courts of limited jurisdiction. On a Rule 12(b)(1) motion to dismiss,
the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence.
See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Subject matter jurisdiction is an
Article III requirement which must be satisfied even if neither party raises an objection. See
Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003). The court may examine
materials outside the pleadings as it deems appropriate in order to resolve the question of its
jurisdiction. See Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C.
2000) aff’d, 2001 WL 135857 (D.C. Cir. Jan. 18, 2001) (citing Herbert v. Nat’l Academy of
Sciences, 974 F.2d 192, 197 (D.C. Cir.1992)). The Secretary’s motion to dismiss for failure to
state a claim under Rule 12(b)(6) should be granted if the allegations in Stone’s complaint do not
“contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). In order to survive the motion to dismiss, Stone must have alleged
facts that would establish the Secretary’s liability. See Stokes v. Cross, 327 F.3d 1210, 1215
(D.C. Cir. 2003). Although the Court must accept the facts pled as true, legal assertions devoid
1
The Court is simultaneously issuing an opinion in Stone v. U.S. Dep’t of Housing and Urban
Development, 13-cv-01780 (CRC), in which Stone challenges the agencies’ responses to his
FOIA requests.
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of factual support are not entitled to this assumption. See Kowal v. MCI Commc’ns Corp., 16
F.3d 1271, 1276 (D.C. Cir. 1994).
III. Analysis
Stone’s complaint must be dismissed because it rests on arguments that have been
squarely rejected by this and other federal courts. The doctrine of res judicata prevents repeated
litigation of causes of action that share the same nucleus of operative facts. See Jenson v.
Huerta, 828 F. Supp. 2d 174, 179 (D.D.C. 2011). Claims share the same facts when they “are
related in time, space, origin, or motivation[;] . . . form a convenient trial unit[; and] . . . their
treatment as a unit conforms to the parties’ expectations.” Id. (quoting Stanton v. D.C. Court of
Appeals, 127 F.3d 72, 78 (D.C. Cir. 1997)). Res judicata forecloses all that was or could have
been litigated in a previous action, and any issue that was raised and decided in a previous
action. See Sheppard v. District of Columbia, 791 F. Supp. 2d 1, 5 (D.D.C. 2011). “The court
may take judicial notice of public records from other court proceedings.” Lewis v. Drug
Enforcement Admin., 777 F. Supp. 2d 151, 159 (D.D.C. 2011) (citing Covad Commc’ns Co. v.
Bell Atl. Corp., 407 F.3d 1220, 1222 (D.C. Cir. 2005)).
Stone seeks the return of the restitution he paid to HUD. See Compl. at 9. He contends
that restitution should never have been ordered by the District Court for the Northern District of
Texas because the government did not prove one of the essential elements of a Section 666
crime: benefits in excess of $10,000 under a Federal program. See id. at 2. Stone advanced
identical arguments concerning the definition of “benefits” and federal assistance during his Fifth
Circuit appeal. While the Fifth Circuit agreed with Stone that the waiver of appeal rights in his
plea agreement would not be valid if there were insufficient facts to support the underlying
crime, it flatly rejected the merits of his challenge:
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The majority of Stone’s brief is devoted to the argument that the facts are
insufficient to establish a violation of § 666. Similar to the argument Hildenbrand
raises, Stone urges that the 10% to 30% discounts CHF received under the
SFAHP do not qualify as “benefits” under a federal program involving any
“federal assistance” within the meaning of § 666 because such terms contemplate
the payment and disbursement of federal funds.
...
[A] discount is, by its very nature, a benefit to the person who receives it; it
provides an advantage, useful aid, and help to the recipient. Stone’s argument . . .
is purely one of form over substance. Although received in the form of a discount,
it is undisputed that CHF received a quantitative monetary benefit from HUD
through the discounts under the SFAHP. Stone’s factual resume lists the monetary
value of each discount received by CHF in its purchase of program homes from
June 1999 through March 2000, which discounts totaled $152,906.80.
...
Because there is a statutory scheme authorizing the discounts on SFAHP homes
and because the scheme furthers the public policy objectives of both expanding
home ownership opportunities for low- and moderate-income purchasers and
strengthening neighborhoods, we conclude that participation in the SFAHP
qualifies as federal assistance.
United States v. Hildenbrand, 527 F.3d 466, 474, 477–78 (5th Cir. 2008). The Supreme Court
denied Stone’s petition for certiorari. See Hildenbrand v. United States, 555 U.S. 946 (2008).
Because the Fifth Circuit decision rejecting the identical arguments Stone makes here is res
judicata in this case, Stone’s complaint must be dismissed.
Judge Berman Jackson’s decision in Stone v. Holder—holding that the government had
not waived sovereign immunity and consented to suit on the identical claims—is also res
judicata in this case. The fact that the prior case was directed against HUD itself, rather than the
Secretary in his official capacity, does not change the res judicata analysis. “A suit against a
government official in his official capacity ‘generally represent[s] only another way of pleading
an action against an entity of which an officer is an agent,’ such that ‘an official capacity suit is,
in all respects other than name, to be treated as a suit against the entity.’” Partovi v.
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Matuszewski, 647 F. Supp. 2d 13, 17 (D.D.C. 2009) aff’d, 2010 WL 3521597 (D.C. Cir. Sept. 2,
2010) (quoting Kentucky v. Graham, 473 U.S. 159, 165–66 (1985)). Accordingly, Stone’s suit
must be dismissed on that independent ground as well.2
IV. Conclusion
The Fifth Circuit has already denied the merits of Stone’s challenge, and this court has
dismissed his virtually identical complaints on grounds of sovereign immunity. Stone has not
alleged why the outcome here should be any different.
For the foregoing reasons, it is hereby
ORDERED that Defendant’s Motion to Dismiss is GRANTED.
This is a final, appealable order.
SO ORDERED.
CHRISTOPHER R. COOPER
United States District Judge
Date: November 3, 2014
2
Even if all issues had not already been litigated in the Secretary’s favor, the Court would find
that Stone has not established a waiver of sovereign immunity. Sovereign immunity shields the
Federal government, its agencies, and officials named in their official capacity from suit. Stone
v. Dep’t of Treasury, 859 F. Supp. 2d 53, 57 (D.D.C. 2012). It operates unless Congress has
expressly waived immunity to suit. See United States v. Mitchell, 463 U.S. 206, 212 (1983).
Stone offers two grounds for jurisdiction over his suit: Federal question jurisdiction under 28
U.S.C. § 1331 and the Mandatory Victim Restitution Act of 1996, 18 U.S.C. § 3663A. Federal
question jurisdiction does not by itself waive sovereign immunity. See Swan v. Clinton, 100
F.3d 973, 981 (D.C. Cir. 1996). And, as Judge Berman Jackson held in 2012, the MVRA simply
“requires courts to order restitution to the victims of certain offenses[; it] does not provide a
waiver of sovereign immunity.” Stone, 859 F. Supp. 2d at 57 (citations omitted).
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