Settlement Questioned as Fraud on the Court
A federal judge in Miami has reopened Donald Trump's $10 billion lawsuit against the Internal Revenue Service, rejecting a settlement that created a controversial $1.8 billion "anti-weaponization" fund. Judge Kathleen Williams, an appointee of former President Barack Obama, ordered the case reopened after 35 former federal judges filed a motion arguing the settlement "is a product of collusion and is itself a fraud on the court."
The lawsuit originated after Trump's personal and business tax returns were leaked by a former contractor. Rather than proceed to trial, Trump's legal team and administration lawyers settled the case, with acting Attorney General Todd Blanche agreeing to establish the fund to compensate people Trump says were wrongly targeted by the federal government.
Bipartisan Judges Challenge the Deal's Legitimacy
The 35 former judges, appointed by both Democratic and Republican presidents, argued that Trump occupies an impossible legal position in the case. As president, Trump filed the lawsuit as plaintiff, yet he also leads the executive branch that oversees the IRS as defendant. This arrangement, they contended, allowed Trump to use the lawsuit as justification for what they called the "looting" of American taxpayers.
The retired judges wrote that the case represented "collusion" between the president's lawyers and the federal government. They asked Williams to investigate whether the court was "deceived" before the settlement was reached. Williams said in her order that she is "empowered to investigate serious misconduct" and ordered Trump's attorneys to respond by June 12 to charges of collusion and whether the parties were truly adversarial.
Fund Faces Separate Legal Freeze
A second federal judge has already taken action against the fund. U.S. District Judge Leonie Brinkema in Virginia, an appointee of former President Bill Clinton, temporarily froze the fund on Friday, ordering Trump officials to stop setting up the pool of money to "ensure that no funds are irreversibly disbursed." Brinkema scheduled a June 12 hearing to determine whether the freeze should remain in place.
The Virginia freeze resulted from a lawsuit brought by former Justice Department lawyer Andrew Floyd and other plaintiffs, who argued the nearly $2 billion was never approved by Congress and "rewards and incentivizes unlawful behavior and facilitates an astounding abuse of taxpayer funds."
Acting Attorney General May Be Called to Testify
Todd Blanche, the acting attorney general and Trump's former personal defense lawyer, signed the agreement that granted the Trump family immunity from future IRS audits. Williams questioned in her order why only Blanche signed the "forever" provision shielding the Trumps from scrutiny. The judge's inquiry could ultimately compel Blanche and other Justice Department officials to testify in court about the settlement's terms and circumstances.
A Justice Department spokesperson did not respond to NPR's request for comment. Justice Department officials said on social media that they would "do everything in our power to make whole those who were persecuted for political purposes."
Fund Lacks Precedent and Oversight
Legal experts have raised alarm about the fund's structure and purpose. Adam Zimmerman, a law professor at the University of Southern California, told NPR that past presidential compensation funds, whether addressing Holocaust claims or the BP oil spill, resolved sprawling class-action lawsuits involving identifiable injuries to discrete groups under neutrally applicable rules.
This fund operates differently. It offers money to an indeterminate group of people who never initiated legal action, lacks clear oversight mechanisms, and has no connection to the claims Trump alleged in his original IRS lawsuit. Zimmerman described it as "unlike anything we've seen in the history of the republic."
Political Fractures Over Fund's Purpose
The fund has sparked divisions even within Republican circles. Critics describe it as a slush fund for Trump allies and January 6 rioters, though the fund is not overtly limited by political persuasion. Lawmakers, including some Republicans, have termed it a political liability.
Former Trump attorney Michael Cohen, now a Trump critic, announced he will apply for compensation, claiming he suffered "identical" financial and personal persecution to those the fund was designed to help.
