The opinion of the court was delivered by: SCHWARTZ
ALLEN G. SCHWARTZ, DISTRICT JUDGE:
Plaintiff John Rooney was wrongly convicted of a serious crime. But unlike Dr. Richard Kimball in "The Fugitive," or Jean Valjean in "Les Miserables," he did not attempt to disguise his identity and hide, but opted instead for the less dramatic path of appealing his conviction to the Second Circuit. Having succeeded in having his conviction overturned, he has now instituted a civil suit against the United States and the individual government officials whom he believes to be responsible for his persecution. The defendants have moved to dismiss the complaint or, in the alternative, for summary judgment. For the reasons stated, defendants' motion is granted.
A. The Dawnwood Apartments Loan Agreements
In 1981, Rooney, a real estate developer, formed a New York State limited partnership known as "Dawnwood Properties '78" ("Dawnwood") of which he was the sole general partner and 95% owner. During the events at issue, defendants Roy Wittich and Paul Higgins were employed by the Rural Development branch of the United States Department of Agriculture ("Rural Development"), then known as the Farmers Home Administration ("FmHA"), which administers the Rural Rental Housing Program under Section 515(b) of the Housing Act of 1949, 42 U.S.C. § 1485(b). The Housing Act permits Rural Development to extend loans to private parties to construct rental housing for low-income individuals residing in rural areas. Higgins, as District Director, and Wittich, as the multi-family coordinator in the Newburgh, New York office of Rural Development, were responsible for ensuring that loan recipients under their jurisdiction complied with applicable federal regulations. (Declaration of Roy Wittich dated August 20, 1997 ("Wittich Decl.") P 4, Ex. A; Declaration of Paul Higgins dated August 20, 1997 ("Higgins Decl.") P 3.)
After several years of negotiations, in December 1983, Rooney executed a $ 750,000 loan agreement with Rural Development for the construction and operation of a senior citizens residence in Greenport, New York, to be known as the Dawnwood Senior Citizens Housing Project ("the Dawnwood Apartments") (Wittich Decl. Ex. C.) Due to cost overruns on the project, Dawnwood executed a second, superseding Section 515 loan agreement with Rural Development on April 25, 1988. Pursuant to the 1988 loan agreement, Dawnwood borrowed a superseding total amount of $ 1,042,000 (Wittich Decl. Ex. F.) In connection with the first loan, on November 6, 1985, Dawnwood executed with Rural Development a promissory note for $ 718,000 with interest at 9% per annum secured by a mortgage against the Dawnwood Apartments. (Wittich Decl. Ex. D, E.) In connection with the 1988 superseding loan, on November 4, 1988, Dawnwood executed with Rural Development a promissory note in the amount of $ 230,187 with interest at 9.5% per annum, secured by a second mortgage against the Dawnwood Apartments. (Wittich Decl. Ex. G, H.) The Dawnwood Apartments were completed in November 1990. (Wittich Decl. P 18.)
B. Rooney's Criminal Prosecution
The gravamen of Rooney's complaint is that the defendants conspired to subject him to unwarranted criminal prosecution. The details of Rooney's criminal prosecution are recited in the Second Circuit's opinion vacating his conviction, published as United States v. Rooney, 37 F.3d 847 (2d Cir. 1994), and this discussion draws heavily on that opinion.
The events leading to Rooney's criminal prosecution began in September 1985, when Dawnwood contracted with DeBrino Caulking Associates, Inc. ("DeBrino"), a general contractor, to build the Dawnwood Apartments. DeBrino began to build the apartments in January 1986. By February 1990, Dawnwood had incurred substantial cost overruns. As a general partner of Dawnwood, Rooney was personally obligated to pay DeBrino for such additional costs, as well as to repay all funds borrowed from Rural Development. 37 F.3d at 849. At this point,
Rooney had a choice. He could remain personally liable to DeBrino Caulking for these additional costs or he could apply for more loans from [Rural Development] to immediately pay off DeBrino Caulking, but thereby increase his own indebtedness to the agency.
Id. at 849-50. According to the Second Circuit, Rooney attempted to turn this precarious situation to his advantage by asking DeBrino's President, Lewis Houghtaling, to install a pond at the development at no additional charge to Dawnwood in return for Rooney's promise to borrow additional funds from Rural Development. Id. at 850. Houghtaling was uncomfortable with this proposal and contacted the defendants,
who convinced him to tape record his conversations with Rooney. Id. During the recorded conversations, Rooney reiterated his proposal to Houghtaling. Id. On the basis of these conversations, Rooney was indicted in the Northern District of New York on January 4, 1991 on one count of corruptly soliciting a thing of value in connection with a federally funded housing project, in violation of 18 U.S.C. § 666(a)(1)(B), and two counts of making a false statement and concealing a material fact in submissions to the Government, in violation of 18 U.S.C. §§ 1001. On April 6, 1991, Rooney was convicted on all counts.
On October 4, 1994, the Second Circuit reversed Rooney's conviction under 18 U.S.C. § 666(a)(1)(B) and vacated the judgment of conviction under 18 U.S.C. § 1001. With regard to the corrupt solicitation count, the Second Circuit stated "we are convinced that Rooney's conduct in this case cannot be considered 'corrupt' because he violated no official or public duty owed to the government or the public at large." Id. at 854. The Second Circuit also reversed Rooney's conviction on the two false statement counts on the grounds that his conviction on these counts could have been the result of prejudicial spillover from his wrongful conviction on the corrupt solicitation count. Id. at 857.
Rooney alleges that his criminal prosecution was the result of a deliberate plan by the defendants to spoil his relationship with DeBrino and enlist DeBrino's aid in their scheme to subject Rooney to criminal prosecution. Specifically, he alleges that the defendants in aid of this plan "falsely encouraged" the construction of a water pond at the Dawnwood Apartments (Am. Compl. P45), inflated Dawnwood's indebtedness to DeBrino (Id. at PP 41(g)(k), 55(p)), encouraged DeBrino to overstate the amount owed by Dawnwood (Id. at PP 47, 48), offered DeBrino financial incentives to cooperate in the criminal investigation of Dawnwood (Id. at PP 44, 50, 51) and encouraged DeBrino officials to surreptitiously record their conversations with Rooney (Id. at P 46).
C. Alleged Biased Administration of the Loan Agreements
Rooney also alleges that the defendants administered the Dawnwood loan agreements in an incompetent and biased manner, resulting in substantial delays and cost overruns. Specifically, he alleges that:
(1) Wittich and Higgins altered the loan agreements to make him liable for cost overruns and abused their power to disburse loan proceeds and threatened to foreclose the Government's mortgages in order to coerce him into executing revised loan agreements making him liable for cost overruns (Am. Compl. PP 29, 34, 41(i) (t), 55(g)(n), 60(i)(r));
(2) Wittich and Higgins abused their power to disburse loan proceeds in order to force Rooney to obtain an unnecessary water permit from the Town of Hudson, New York, at considerable expense to himself and Dawnwood (Am. Compl. PP 41(a)(b)(c)(g), 55(a)(b)(d), 60 (a)(b)(c)(e));
(3) Wittich and Higgins revised Dawnwood's loan agreement in August 1988 to limit the amount of rent that could be charged to tenants at the Dawnwood Apartments (Am. Compl. PP 41(e), 55(e), 60 (f));
(4) Wittich and Higgins wrongfully subordinated the Government's 1985 mortgage on the Dawnwood Apartments Mortgage to a mechanics' lien filed by DeBrino (Am. Compl. PP 41(u), 55(o), 60 (u));
(5) Wittich and Higgins concealed from Rooney crucial information relating to electrical wiring and other work requirements in the construction of the Dawnwood apartments (Am. Compl. PP 41(f), 41(l), 60(g), 60(l));
(6) Wittich and Higgins wrongly diverted $ 84,000 retained by Rural Development in trust for Dawnwood as security for DeBrino's satisfactory performance towards the payment of Dawnwood's loan from Rural Development (Am. Compl. PP 41(n), 55(i), 60(m));
(7) Wittich and Higgins withheld approximately $ 36,000 in repair grants for Dawnwood tenants (Am. ...