President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service over a leaked tax-return scandal from six years ago was on the verge of an epic settlement. In exchange for Trump dropping his suit, the federal government agreed to never pursue tax enforcement against the president, his family, and their businesses over past tax returns and agreed to establish a $1.7 billion “anti-weaponization fund” for anyone prosecuted by prior administrations, with Jan. 6 insurrectionists set to be the major beneficiaries. The agreement was short-lived, however, as even an obedient GOP could not swallow such an audacious sweetheart deal. Now a suspicious judiciary is coming after Trump for even conceiving of an arrangement that reeks of such bad faith.
“We are not moving forward with the fund. Period,” acting Attorney General Todd Blanche told lawmakers during a committee hearing on Tuesday. That statement put an end (sort of) to the fund that would have used taxpayer dollars to pay out Trump allies and perhaps, indirectly, Trump himself, for any perceived grievances, mostly against the Biden administration. Disgraced former Republican Rep. George Santos and a plethora of inner-circle associates and pardoned convicted criminals were already strategizing a way to apply for the fund. But two weeks ago, Senate Republicans held a meeting with Blanche where things turned contentious, with senators yelling at the attorney general about how the fund “feels like Trump cut a deal with himself.” Sen. Mitch McConnell didn’t attend the meeting but told CBS News, "So, the nation's top law enforcement official is asking for a slush fund to pay people who assault cops? Utterly stupid, morally wrong—take your pick."
Technically, when Blanche promised lawmakers the anti-weaponization fund would not be moving forward, he was not under oath. When Democratic Rep. Grace Meng pressed Blanche on this, he would not commit to putting anything into writing. And during that same hearing, Blanche confirmed that the part of the settlement agreement that “FOREVER BARRED” the federal government from pursuing tax enforcement against Trump, his family, and their businesses over any past tax returns remains in place. This is an enormous windfall for Trump, as his businesses have landed multimillion-dollar deals from crypto ventures and his sons have signed equally lucrative licensing and management deals since he retook the White House last year. All in all, Forbes estimated that the Trumps could save over $600 million with a tax immunity deal.
The slush fund appears dead, at least for now, as Blanche chose to prioritize Trump’s own personal interests over those of the hundreds of people whom the president inspired to commit violent crimes at the Capitol. Things began to fall apart last week when U.S. District Judge Leonie Brinkema issued a temporary restraining order banning the fund. The Justice Department said it disagreed with the ruling but would honor it at least until June 12, when a hearing is scheduled for Brinkema to make a final decision. The judge’s action was prompted after a former DOJ prosecutor and other plaintiffs who said they were targeted by the Trump-Vance administration sued over the legality of the fund. At this point, it’s unclear what the DOJ will argue before Judge Brinkema, but the indication is that it will drop its arguments in favor of the slush fund.
That is not the only legal challenge, though, as one day after Brinkema’s order, U.S. District Judge Kathleen Williams reopened Trump’s IRS lawsuit, an exceedingly uncommon practice, under a federal procedure rule that allows a judge to rule on the legitimacy of a legal challenge to assess “whether an attorney has abused the judicial process.” Williams' decision came after 35 former federal judges from across the political spectrum submitted a motion to the judge that argued Trump and the DOJ voluntarily settled the president’s lawsuit “solely to avoid judicial scrutiny of a lawsuit that ‘was collusive from the start’ and was only filed to provide the imprimatur of legality for an unlawful settlement.”
When Williams was first assigned Trump’s IRS lawsuit, she expressed concerns about how the president was essentially on both sides of the case, as the U.S. president also controls who leads the Justice Department, and how this dynamic could be collusive. In order to assess whether Trump’s lawsuit was valid, she ordered his personal attorneys and the DOJ to provide written explanations to the court detailing whether they were in conflict with each other. Days before having to submit to Williams, news that the IRS was considering settling with Trump came to light, and soon enough the DOJ formally announced the settlement, which included establishing the anti-weaponization fund. This solved two critical problems for Blanche: His boss gets to claim victory while the acting attorney general can legally evade judicial accountability. With a settlement in place, Williams seemed to lose control over the legal dispute—until this week, when she used the clever procedural maneuver to reopen the case.
Williams is attempting to call Blanche’s bluff by reopening Trump’s IRS lawsuit, which will require the DOJ to certify that everything it filed in that case served a legitimate purpose, and was not solely to produce a rigged settlement to benefit Trump. As former U.S. Attorney Harry Litman smartly pointed out, Williams also flagged that the tax amnesty granted to Trump as part of the settlement was signed with the seal of the DOJ by Blanche alone, and not anybody actually responsible for tax enforcement at the IRS. By June 12, the same day the DOJ is due in Brinkema’s court, Blanche and Trump’s attorneys need to provide answers to Williams on three major questions: Did Trump and Blanche collude, and are they genuinely adverse parties? Was Trump’s lawsuit dismissed on a deceptive premise? And was the U.S. judiciary “the victim of a fraud”?
Whatever happens next in the case will have major ramifications not just for Trump and his family, but for the rule of law in this country.
The judiciary is not the only player trying to pin down the Trump administration, though. Democrats are planning to force votes in Congress to nullify the president’s IRS immunity, which is likely illegal, as federal law bans presidents from interfering in the tax audit process. Democratic Rep. Jamie Raskin told the New Republic that his party will strengthen the existing law and expand it to include other governmental investigations—if they win the House in the upcoming midterm elections.
