The federal judge overseeing President Trump’s $10 billion lawsuit against the Internal Revenue Service reopened the case Friday after Trump had dropped it earlier this month as part of a controversial settlement agreement with the Justice Department involving the establishment of a $1.776 billion fund to compensate people who claim they were victims of government “weaponization.”
Judge Kathleen M. Williams ordered President Trump’s personal legal team to respond by June 12 to a motion alleging that the settlement agreement was “collusive” and that Trump’s voluntary dismissal of his lawsuit “was premised on deception” and intended to avoid judicial scrutiny in the case while he cut a deal with his own government. Besides the creation of the so-called “anti-weaponization” fund, the deal also barred the IRS from pursuing investigations into Trump’s past tax filings and those of his sons and the Trump Organization.
That court order came just hours after another federal judge ordered a two-week pause on the creation or operation of the settlement fund. U.S. District Judge Leonie Brinkema in Alexandria, Virginia, blocked any work on the new fund, including transfers of money into it, considerations of claims, or disbursements of payments, at least until a hearing on June 12.
Brinkema’s order adds to the uncertainty surrounding the fund, which has elicited a fierce backlash from government watchdogs and on Capitol Hill since it was announced earlier this month. Lawmakers in both parties have taken issue with the fund, created as part of a deal that saw President Trump drop a $10 billion lawsuit he filed against the Internal Revenue Service over the leak of his tax records.
Critics charge that the unprecedented “slush fund” will allow Trump to direct vast sums of taxpayer money to his allies, potentially including rioters who attacked the Capitol on January 6, 2021. Democrats have floated plans to tax 100% of any payouts from the fund, and several lawsuits have been filed seeking to block its establishment. The new court ruling comes in a suit brought by a former Justice Department prosecutor and others who say that the fund is unconstitutional and discriminatory. They claim they were targeted by the Trump administration and argue that the fund is designed to benefit the president’s allies so that they would not be treated equally by its administrators.
“Today, a federal court recognized the urgent need to prevent taxpayer dollars from being distributed through a secretive and unprecedented political compensation scheme before the legality of that program can be fully reviewed by the court,” Skye Perryman, president and CEO of Democracy Forward, one of the plaintiffs, said in a statement. “No administration has the authority to spend public money through a political rewards program that Congress never authorized.”
Brinkema said in her order that a full briefing by lawyers “will enhance the ability of the Court to make a sound decision” on the legal challenge and that it is important to issue a freeze “to ensure that no funds are irreversibly disbursed” from the fund, especially because the plaintiffs said that the Justice Department had refused to hold off on paying any claims for at least a few weeks to allow time for the case to play out.
There is little public indication so far that the Justice Department has moved to set up the fund or the five-member board that is supposed to oversee it, though some prospective claimants have already announced that they would seek compensation. Under the terms of the settlement announced by the Justice Department earlier this month, acting Attorney General Todd Blanche, who formerly served as Trump’s personal lawyer, has 30 days — meaning until June 17 — to establish the fund, set up its rules and name the board. The government then has until July 17 to send the Treasury Department the necessary documentation to get the nearly $1.8 billion into a designated account.
A Justice Department spokesperson reportedly responded to the court order by saying that the fund was established legally and suggesting that the judge’s personal politics had influenced her decision. Brinkema was appointed by Democratic President Bill Clinton.
“The Department remains extremely confident in the legality of the Anti-Weaponization Fund which is supported by ample precedent, including Obama-era settlements,” the DOJ said in a statement to news outlets. “We will not allow the policy preferences of judges to interfere with our efforts to provide restitution to victims of lawfare.”