In March 1962, Diokno ordered a raid on a firm owned by Harry S. Stonehill, an American businessman who was suspected of tax evasion and bribing public officials, among other crimes. Diokno's investigation of Stonehill further revealed corruption within government ranks, and as Secretary of Justice, he prepared to prosecute those involved. However, President Macapagal intervened, negotiating a deal that absolved Stonehill in exchange for his deportation, then ordering Diokno to resign. Diokno only learned of his resignation from the news and received death threats from supporters of the president, which prompted Mayor Lacson to offer Diokno special security. Diokno questioned Macapagal's actions, saying, "How can the government now prosecute the corrupted when it has allowed the corrupter to go?" Macapagal would become unpopular and eventually lose the next election in 1965 to another controversial politician also connected with Stonehill named Ferdinand Marcos.