President Trump is reportedly expected to drop a controversial $10 billion lawsuit he brought against the Internal Revenue Service and other legal claims against the federal government in exchange for the creation of a highly unusual $1.7 billion government compensation fund for Trump allies who say they were wrongly targeted by “weaponized” federal investigations under the Biden administration.
How we got here: Trump sued the IRS early this year over the leak of his tax return during his first term. The IRS lawsuit and other legal challenges he has brought against a federal government that he now controls raised clear questions about self-dealing and conflicts of interest. Trump acknowledged that the dynamics of the case are “awfully strange.”
Adding to the extraordinary nature of the proposed settlement, a judge overseeing the case reportedly is considering tossing the suit. By dropping the lawsuit and agreeing to the proposed compensation fund, Trump would be able to secure a financial win that would benefit his allies — and do so before a judge dismisses his legal claim. Trump himself would reportedly be prohibited from receiving direct payments related to his lawsuits, but entities tied to him could still stand to benefit.
January 6 rioters could benefit: The beneficiaries could include the nearly 1,600 people charged with crimes related to the January 6, 2021, attack on the U.S. Capitol. Such payouts “would represent the culmination of the government’s comprehensive effort to rewrite history,” Glenn Thrush, Andrew Duehren and Alan Feuer write at The New York Times. “The proposal would, in many respects, act as a bookend to Mr. Trump’s issuance of clemency to those convicted of crimes during the Capitol riot — felons now valorized by his appointees as heroic and as ‘survivors’ who have been victimized.”
A Trump spokesperson defended the proposal. “The IRS wrongly allowed a rogue, politically motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally released to millions of people. President Trump continues to hold those who wrong America and Americans accountable,” a representative for Trump’s legal team told ABC News, which first reported the proposed fund.
Follow the money: ABC’s Katherine Faulders, Peter Charalambous and Alexander Mallin reported that the proposed fund “would draw money from the Treasury Department's Judgment Fund, a permanent appropriation used by the federal government to pay court judgments and settlements,” according to sources. Trump would reportedly be able to remove members of the commission overseeing the fund without cause, and the process involved in awarding payments would not have to be disclosed. The identities of the recipients could also be kept confidential.
The unprecedented plan, which reportedly has yet to be finalized, could very well face legal challenges of its own, with critics warning that it would essentially serve as a taxpayer-funded Trump slush fund. “An insane level of corruption — even for Trump,” Democratic Sen. Elizabeth Warren of Massachusetts wrote in a post on X.