Federal Judge Rebukes Trump Lawyers Over IRS Lawsuit Tied to $1.8 Billion Fund

Federal judge presiding over a court proceeding in Florida.

MIAMI — A federal judge in Florida sharply rebuked President Donald Trump’s legal team over a $10 billion lawsuit against the Internal Revenue Service that helped pave the way for the now-abandoned $1.776 billion “Anti-Weaponization Fund.”

U.S. District Judge Kathleen Williams found that Trump’s attorneys improperly used the federal lawsuit to pursue benefits that included access to taxpayer funds and protections from audits and other investigations.

The judge also took disciplinary-related action involving attorneys connected to the case and barred the parties from relying on the purported settlement agreement in future official proceedings.

“This lawsuit was not brought to vindicate rights; it was brought to manipulate the judicial process to pursue benefits unavailable in litigation because the Parties were not adverse,” Williams wrote.

Judge finds lawsuit was used for ‘improper purpose’

The case arose from Trump’s lawsuit against the IRS and Treasury Department over the unauthorized disclosure of his confidential tax information.

A former IRS contractor pleaded guilty in 2023 to leaking tax information belonging to Trump and other wealthy Americans.

Trump, his sons and the Trump Organization later sought $10 billion in damages.

But Williams concluded the litigation was improperly employed to justify a deal between Trump and agencies within his own administration.

“The Parties used the existence of federal litigation as a means of conferring legitimacy upon a course of action that they were unwilling to subject to judicial review,” Williams wrote.

The judge expressly found that the plaintiffs acted in bad faith.

Lawsuit became tied to $1.776 billion fund

The Justice Department announced the Anti-Weaponization Fund in May as part of the resolution of Trump’s IRS lawsuit.

Under the department’s announcement, the fund was to receive $1.776 billion from the federal Judgment Fund and compensate people claiming they were victims of government “weaponization.” The program was scheduled to process claims through 2028.

The proposal quickly generated bipartisan scrutiny, particularly over the possibility that Jan. 6 defendants and Trump political allies could seek taxpayer-funded compensation.

The Florida Pundit previously reported that former Proud Boys leader Enrique Tarrio said he expected to seek “tens of millions of dollars” from the proposed fund.

The Trump administration later backed away from establishing the compensation program.

Williams criticizes Justice Department handling

Williams also raised concerns about the Justice Department’s role in negotiating and defending the arrangement.

Her order specifically criticized testimony by acting Attorney General Todd Blanche concerning whether the settlement could have been submitted to the court for review.

Williams described Blanche’s explanation as “at best, misleading and, at worst, disingenuous.”

The judge said the court remained available to review filings while the lawsuit was pending.

The ruling comes as Blanche faces additional scrutiny over his role in the agreement and the protections reportedly included for Trump, his family and businesses.

Attorneys face potential disciplinary consequences

Williams directed that her order be transmitted to attorney disciplinary authorities and imposed consequences involving lawyers connected to the litigation.

According to AP and Reuters, Trump attorney Alejandro Brito was referred for possible disciplinary action, while attorney Daniel Epstein was suspended from practicing in the Southern District of Florida for one year.

The order also raised ethical concerns involving senior Justice Department officials tied to the settlement process.

Williams prohibited Trump and the federal government from referring to the purported settlement agreement or using it in judicial, administrative, regulatory, arbitration or other official proceedings.

Trump legal team defends IRS lawsuit

A spokesperson for Trump’s legal team defended the underlying lawsuit, pointing to the unauthorized disclosure of Trump’s tax information.

“The IRS wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization,” the spokesperson said in a statement reported by ABC News.

Trump’s lawyers have maintained that the disclosure caused financial and reputational harm.

The judge’s ruling does not erase the underlying fact that confidential tax information was unlawfully disclosed. Instead, Williams focused her criticism on how the subsequent lawsuit and purported settlement were used.

Ruling adds new chapter to Anti-Weaponization Fund controversy

The ruling represents another major setback for the Anti-Weaponization Fund, which had already been abandoned by the administration following political and legal scrutiny.

Questions remain over the broader protections reportedly included in the purported agreement, including restrictions involving IRS examinations of Trump, his family and businesses.

Williams’ order did not fully resolve how those provisions will be treated in future disputes.

Separate litigation challenging the proposed settlement and fund has also moved through federal courts.

The Florida ruling now places the conduct of Trump’s lawyers and senior Justice Department officials under additional scrutiny while effectively preventing the purported settlement from being used as an official legal shield.