A Florida federal judge in a scathing order Monday said President Donald Trump filed a $10 billion lawsuit against the Internal Revenue Service “for an improper purpose” — to gain the appearance of “judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.”
That controversial out-of-court settlement with the IRS and Department of Justice in May briefly led the DOJ to create a since-abandoned $1.8 billion “lawfare” fund to compensate purported victims of prosecutorial overreach by the department.
It also led to Trump, his family members and related business entities being granted effective immunity from audits, prosecution or regulatory enforcement action by the IRS for tax returns filed up to the date of the settlement in May.
Judge Kathleen Williams, in her new order in U.S. District Court in Miami, pointed to Trump’s power over the IRS and DOJ when he filed the suit as president and then reached a settlement with the parties out of court.
“The Court determines that Plaintiffs improperly employed this lawsuit to justify a particular award in this matter — access to taxpayer funds and exemption from audits and other investigations—which was accomplished by leveraging control over Defendants,” she wrote.
“There was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail,” Williams wrote. “The Lead Plaintiff and the Government are one, a fully realized unitary interest.”
However, she did not explicitly void the provisions of the settlement.
In a footnote, she pointedly wrote that the question of “whether a private agreement” between both sides is valid and enforceable “is not before this court.”
But the judge also separately wrote that a provision in the settlement barring audits of Trump “directly contravenes” a federal law barring the executive branch from influencing taxpayer audits and other investigations.
Williams also said that “the conferral of possibly millions of dollars in tax relief” by the settlement potentially violates the Constitution’s bar on increasing compensation paid to a president during his tenure in the White House.
Williams, in her order, referred Trump’s lawyer in the suit, Alejandro Brito, to the Florida Bar for consideration of whether Brito should be disciplined in light of her findings.
She also ordered a copy of the order to be sent to the New York State Bar Association, of which acting Attorney General Todd Blanche is a member, as well as to the District of Columbia Bar, of which Associate Attorney General Stanley Woodward is a member.
Blanche, who is Trump’s former criminal defense lawyer, announced the creation of the DOJ’s compensation fund after the president dropped his lawsuit. The settlement was not submitted to Williams or any other court for review.
Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization had sued the IRS in January over the leak of his tax records by an agency contractor, who pleaded guilty in connection with that act in 2023.
Trump has nominated Blanche to serve as attorney general. The Senate Judiciary Committee is due to hold hearings on Blanche’s nomination on Wednesday and Thursday.
Williams, in her order, barred Trump, the DOJ and other parties in the case from using “the purported ‘settlement agreement'” in judicial or other proceedings as evidence of a settlement of the lawsuit.
“This action was never about a party seeking judicial resolution of a legal issue or a factual dispute,” Williams wrote in her order.
“The nature of the suit itself and the conduct of the Parties and counsel from its filing make plain that this was an attempt to use the Court to provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the President and to earmark billions of dollars from American taxpayers to redress grievances not defined in the law,” the judge wrote.
Williams pointed to the specific dollar amount of the DOJ’s “Anti-Weaponization Fund,” which was a nod to the year 1776, the year in which the Declaration of Independence was adopted.
She said that Trump and the other plaintiffs could make no connection in their lawsuit “between the billions of dollars they sought, and the recovery authorized under the governing statute,” and that they filed the suit “asserting claims that they knew, or should have known, were time-barred and for an amount of damages unsupported by facts or law.”
In a footnote, Williams wrote, “Even the Fund amount — $1.776 billion — speaks of a ‘branding’ effort rather than a deliberate and thoughtful calculation of damages.”
Williams’ order came in response to a brief filed by 35 former judges calling on her to reopen the case, which Trump and the IRS settled before Williams could rule on the question of whether the parties were actually adverse to each other given Trump’s position as president and head of the executive branch of government, which includes the IRS.
“The court’s opinion is a resounding victory for the rule of law,” said the lawyers who represented the judges, Norm Eisen and Matt Platkin, in a statement.
“We are proud to represent these former judges in presenting the arguments that the court adopted,” the attorneys said.
A spokesman for Trump’s legal team, which includes Brito, in a statement responding to the order, said, “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,” the spokesman said.
The White House declined to comment to MS NOW, referring questions to the Trump legal team spokesman.
A DOJ spokesperson, in a statement, said, “There was no collusion in this case, and the partisan judge who speculated otherwise has disregarded decades of precedent.”
“This case was brought by President Trump in his personal capacity, as well as by several members of his family, who were all victims of admitted violations of law,” the DOJ spokesperson said.
“There was a live dispute because the plaintiffs sought relief that the government had not provided,” they said. “The plaintiffs did not receive any money and were barred from receiving any from the now-defunct Anti-Weaponization Fund.”