United States District Court, District of Columbia
JEFFREY J. PROSSER, et al., Plaintiffs,
JEFFERSON B. SESSIONS, III, et al., Defendants.
N. MCFADDEN United States District Judge.
se Plaintiff Jeffrey Prosser is the debtor in a Chapter
7 bankruptcy and the beneficial owner of three companies in
Chapter 11 bankruptcy. Compl. 3 n.5, 5, ¶ 3. Pro
se Plaintiff John Raynor is a former director and
outside counsel to one of Mr. Prosser's companies, has
pursued legal claims against the National Rural Utilities
Cooperative Finance Corporation, or CFC, and has been the
defendant in what he characterizes as an extortionary
adversary proceeding. Id. ¶ 4. Plaintiffs
allege that CFC has engaged in an extensive scheme of
accounting fraud and public corruption in violation of the
Racketeer Influenced and Corrupt Organizations Act, or RICO.
Through this lawsuit, they seek to compel Attorney General
Jeff Sessions to intervene in Mr. Prosser's bankruptcy
proceedings. They also seek to compel Treasury Secretary
Steven Mnuchin to cease and desist funding CFC from the
United States Treasury. Because Plaintiffs have failed to
state a claim that entitles them to the requested
intervention and have not shown standing to challenge
CFC's funding, the Defendants' Motion to Dismiss will
Complaint and other filings focus mainly on allegations about
CFC's misconduct. Although CFC is not a party to this
case, Plaintiffs' allegations against CFC provide the
basis for their request that the Attorney General intervene
in Mr. Prosser's bankruptcy proceedings and that the
Secretary of the Treasury discontinue funding of
CFC.CFC is a tax-exempt, member-owned financing
cooperative that supplements federal loan programs to support
the generation and distribution of electricity in rural
America. Id. ¶¶ 10-11. Plaintiffs allege
that CFC engaged in extensive accounting fraud, including
embezzling nearly $263 million in five years from the Rural
Telephone Finance Cooperative, or RTFC, which CFC controls.
Id. ¶¶ 30-56. Plaintiffs also allege that
CFC corrupted public officials in the Virgin Islands,
including several federal prosecutors and former Governor
John Percy de Jongh, Jr., who was arrested for financial
crimes. Id. ¶¶ 16, 21, 23. According to
Plaintiffs, “Fraud and criminality is a systemic part
of CFC's operations and without it, CFC cannot
financially survive.” Id. ¶ 62.
allege that CFC has victimized them for their efforts to
address its misconduct. Mr. Prosser alleges that he
discovered CFC's accounting fraud when his three
companies borrowed money from RTFC, which CFC controlled, and
CFC embezzled funds from those companies. Id. at 3.
Mr. Prosser says that, because he “raised the issue of
Embezzlement, ” RTFC illegally foreclosed on loans that
it made to his companies and forced Mr. Prosser and his
companies into bankruptcy. Id. at 5.
Raynor, a former director and outside counsel to at least one
of Mr. Prosser's companies, alleges that he filed a civil
False Claims Act complaint against CFC. Id. at 10.
He also alleges that he provided information to the
Department of Justice to encourage an investigation of
potential RICO violations, potential criminal False Claims
Act violations, and potential bank fraud, and that the
Department of Justice responded by conducting an extensive
criminal investigation. Id. at 10 & n.14, 14.
Mr. Raynor says that he was forced to defend himself in an
extortionary adversary proceeding. Id. at 10.
also allege that, in what they call the “ICC Bribery,
” CFC paid about $20 million in bribes to public
officials “to facilitate the involuntary bankruptcy of
New ICC [one of Mr. Prosser's companies] and to enlist
the support of those public officials . . . in pursuing
CFC's retaliatory agenda.” Pls.' Statement of
Facts in Opp. to Mot. Dismiss 4-5. CFC arranged these bribes
through a consultant and several court-appointed bankruptcy
professionals in Mr. Prosser's bankruptcy proceedings.
Id. at 4. According to Plaintiffs, CFC bribed two
federal prosecutors, at least one witness in the bankruptcy
proceedings, and a former Territorial Senator, Alvin
Williams, who was arrested on six counts of bribery in 2012.
Compl. 6-7. Plaintiffs also allege the Department of Justice
forced the judge presiding over the bankruptcy proceedings to
retire from the bench after a pattern of unsupportable
decisions that suggested bribery. Id. at
District Court for the U.S. Virgin Islands sealed at least
some records in the criminal proceeding against former
Territorial Senator Williams to protect the Department of
Justice's ongoing criminal investigation. Id. at
8. Plaintiffs have tried to have these records unsealed, but
without success. Id. at 8-9. Plaintiffs allege the
sealed records would show that
(i) the foreclosure which resulted in the Prosser
Bankruptcies was unlawful; (ii) the Bankruptcy proceedings in
the Prosser Bankruptcies were completely and thoroughly
corrupted and lacked any integrity whatsoever; (iii) the
Bankruptcy proceedings in the Prosser Bankruptcies were not
impartially adjudicated; and (iv) with the implied consent of
the DOJ, the U.S. Treasury has funded CFC's pattern of
racketeering activities in violation of the False Claims Act.
Id. at 9. This allegation is based at least in part
on statements made to Mr. Prosser by a co-indictee of Mr.
Williams. Id. at 8.
Prosser and Mr. Raynor brought this case against the Attorney
General and the Secretary of the Treasury in their official
capacities, seeking an order from the Court compelling the
Attorney General to intervene in Mr. Prosser's bankruptcy
proceedings and directing the Secretary to cease and desist
funding CFC. Id. at 37-38. Plaintiffs also filed a
Motion for Miscellaneous Relief, seeking an order from the
Court directing the Department of Justice to file under seal
in this case: (1) the sealed documents from Mr. Williams'
criminal case; and (2) any documents involving admissions by
the bankruptcy judge that he did not impartially adjudicate
Mr. Prosser's bankruptcy proceedings. Defendants moved to
dismiss the case for failure to state a claim to the
requested relief and for lack of standing.
survive a motion to dismiss for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6), a complaint
must contain sufficient factual allegations that, if true,
“state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). Plausibility requires that a complaint raise
“more than a sheer possibility that a defendant has
acted unlawfully.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). Pleading facts that are “merely
consistent with” a defendant's liability
“stops short of the line between possibility and
plausibility.” Twombly, 550 U.S. at 545-46.
Thus, a court evaluating a motion to dismiss for failure to
state a claim does not accept the truth of legal conclusions
or “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements.”
Iqbal, 556 U.S. at 678. That said, it construes the
complaint in the light most favorable to the plaintiff and
accepts as true all reasonable inferences drawn from
well-pled factual allegations. See In re United Mine
Workers of Am. Emp. Benefit Plans Litig., 854 F.Supp.
914, 915 (D.D.C. 1994). Consideration is limited to
“the facts alleged in the complaint, any documents
either attached to or incorporated in the complaint and
matters of which [the court] may take judicial notice.”
Hurd v. D.C. Gov't, 864 F.3d 671, 678 (D.C. Cir.
motion to dismiss for lack of jurisdiction under Federal Rule
of Civil Procedure 12(b)(1), the plaintiff bears the burden
of establishing jurisdiction. Georgiades v.
Martin-Trigona, 729 F.2d 831, 833 n.4 (D.C. Cir. 1984).
“Article III of the Constitution limits federal
courts' jurisdiction to certain ‘Cases' and
‘Controversies.'” Clapper v. Amnesty
Int'l USA, 568 U.S. 398, 408 (2013) (quoting U.S.
Const. art. III, § 2). “No principle is more
fundamental to the judiciary's proper role in our system
of government, ” and “[t]he concept of standing
is part of this limitation.” Simon v. E. Kentucky
Welfare Rights Org., 426 U.S. 26, 37 (1976). Article III
standing requires an injury that is “concrete,
particularized, and actual or imminent; fairly traceable to
the challenged action; and redressable by a favorable
ruling.” Monsanto Co. v. Geertson Seed Farms,
561 U.S. 139, 149 (2010). “While the district court may
consider materials outside the ...