Judge: Trump’s $10 Billion IRS Suit an Exercise in Self-Dealing
NEWS & RESEARCH
Facing a backlash in Congress and increasing judicial scrutiny, Acting Attorney General Todd Blanche announced the administration would drop its plans for a $1.8 billion “slush fund” to assist Trump allies, including Jan6ers, who faced prosecution under President Joe Biden. However, Blanche refuses to put this in writing and maintains that an addendum granting President Trump and family permanent relief from an IRS audit shall remain in effect. GOP senators voted down a proposal to bar the slush fund and the IRS audit ban. Trump currently faces a purported tax liability of $100 million for having claimed the same tax write-off twice. Federal judge Kathleen M. Williams found that Trump’s $10 billion suit was an improper exercise in self-dealing and barred him from claiming that the extraordinary tax protections he received were part of a legitimate settlement agreement. Judge Williams said the Trump suit was intended to confer legitimacy on Blanche’s immunity agreement and “to earmark billions of dollars from American taxpayers to redress grievances not defined in the law.” She also referred the lawyer who brought Trump’s case against the IRS, Alejandro Brito, to the Florida bar for potential disciplinary proceedings and ordered that copies of her ruling be mailed to the State Bar of New York and DC Bar, where Blanche and Associate AG Stanley Woodward, respectively, are members. Another federal judge, Leonie Brinkema, has issued a temporary order blocking disbursement of funds under the Blanche deal in a suit alleging that the fund violates the separation of powers, the First Amendment and the Equal Protection clause of the Constitution, as well as the Administrative Procedure Act.
SOURCES: The Hill | New York Times | Washington Post | ProPublica | Politico |New York Times | New York Times | Maddow Blog
ANALYSIS & OPINION
Judge Williams reopend the Trump suit in response to a filing by 35 former federal judges who assert that the Blanche deal raised serious questions as to Trump’s “candor toward the court and the manipulation of the judicial system.” Critics and legal watchdogs had swiftly denounced the Blanche deal as a corrupt, taxpayer-funded "slush fund" designed to enrich Jan6ers, including Proud Boys and Oath Keepers, and cement their loyalty as Trump’s “private militia.” The deal was deemed the result of a highly conflicted, collusive “negotiation” in which Trump was effectively negotiating with himself. Under the deal, Trump would have had the authority to remove fund commissioners without cause. The deal would appear to violate the 14th Amendment to the Constitution, which provides that “any debt or obligation incurred in aid of insurrection or rebellion against the United States… shall be held illegal and void.” The addendum would also appear to violate 26 U.S.C. §7217, which prohibits a request by a president, directly or indirectly, to terminate an IRS audit and requires IRS officials who receive such a request to report them to the Treasury Inspector General for Tax Administration.
SOURCES: New York Times | Talking Points Memo | MS NOW | Mother Jones | The Guardian | Public Citizen | Zeteo
HOW TO FIX IT
Federal action:
Pass the No Taxpayer-Funded Settlement Slush Funds Act to block the creation of the slush fund since Congress did not authorize the fund.
Pass the No Rewards for January 6 Rioters Act to bar federal settlement funds from being used to pay Jan. 6 rioters.
Pass the Ban Presidential Plunder of Taxpayer Funds Act, which restricts sitting presidents, vice presidents, and their immediate families from collecting financial damages or lawsuit settlements from the US government.
Conduct oversight hearings on the slush fund and the no-audit addendum.
File complaints with the Treasury or DOJ inspector general to review the legality of the no-audit addendum in light of 26 U.S.C. §7217.
Litigation:
Congress members should consider suing to block the slush fund under the Constitution’s Emoluments Clause.
Support lawsuit filed by 2 police officers asserting that the fund will finance rioters and violate equal protection clause of Constitution.
Other action:
Pursue disbarment action against Todd Blanche for engaging in unethical conduct as an attorney.
Legislation: S.4299 - Ban Presidential Plunder of Taxpayer Funds Act |S.3582 - No Rewards for January 6 Rioters Act | H.R.8914 - No Taxpayer-Funded Settlement Slush Funds Act of 2026