US Judge Finds Abuse of Court in Trump IRS Case

A US judge on Monday ruled that President Donald Trump improperly used a $10 billion lawsuit against the Internal Revenue Service (IRS) to secure personal benefits from the government he leads, preventing the terms of a controversial settlement agreement from taking legal effect.

Miami-based US District Judge Kathleen Williams delivered a scathing assessment of Trump's personal legal team and lawyers representing his administration, finding that the parties were not genuinely opposed to one another, as required in civil litigation. She referred Trump's lawyer in the case, Alejandro Brito, along with senior Justice Department officials who approved the settlement, to state bar authorities to determine whether their conduct breached legal ethics rules.

In her 56-page ruling, Williams concluded that lawyers representing both Trump and the Department of Justice (DOJ) and IRS had misused the legal process to provide legitimacy to actions designed to benefit the President and his allies.

"This action was never about a party seeking judicial resolution of a legal issue or a factual dispute," Williams wrote. Instead, she said, it was an attempt 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 settlement, negotiated in May between Trump's personal lawyers and senior Justice Department officials, led to Trump withdrawing the lawsuit in exchange for sweeping tax protections and the creation of a fund worth nearly $1.8 billion for alleged victims of government "weaponisation". Critics argued that the arrangement would primarily benefit Trump's political allies.

Williams' order prevents any party to the case—including Trump, his adult sons and the Trump Organisation—from referring to the settlement or relying on any of its terms in future legal proceedings. The ruling could effectively invalidate the provision that sought to prevent the IRS from pursuing audits relating to Trump's previous tax matters or those of his businesses.

Acting Attorney General Todd Blanche has already informed Congress that plans to establish the proposed "weaponisation" fund would not proceed. The fund had been intended to compensate individuals claiming to have been victims of "lawfare" and government "weaponisation"—terms Trump has frequently used to describe legal proceedings brought against him and his supporters. A federal judge in Virginia blocked the administration from establishing the fund last month.

Trump filed the lawsuit against the IRS in January, alleging that the agency had failed to prevent the disclosure of his tax records during his first term in office. He initially sought $10 billion in damages.

The proposed settlement drew widespread criticism, including from several Republican lawmakers, who accused the administration of self-dealing and attempting to channel taxpayer funds to political allies. Under pressure from Republican senators, Blanche agreed to abandon the proposed compensation fund while retaining the tax-related provisions of the agreement.

A spokesperson for Trump's legal team did not directly respond to the court's ruling but reiterated claims that the President's tax records had been unlawfully leaked, adding that Trump "continues to hold those who wrong America and Americans accountable."

The Justice Department did not immediately respond to requests for comment.

The ruling comes just two days before Blanche, who previously served as Trump's personal lawyer, is due to appear before a Senate committee considering his nomination to become the permanent Attorney General. The IRS settlement is expected to feature prominently during the confirmation hearing.

Judge Williams launched an inquiry into the settlement after a group of former judges filed a legal brief accusing Trump and his administration of committing a "fraud on the court". Trump's lawyers argued that the judge no longer had jurisdiction because the lawsuit had already been voluntarily dismissed.

Although Williams declined to reopen the case, she ruled that Trump's lawyers and senior government officials should face potential sanctions. She also authorised outside groups that had filed briefs challenging the settlement to seek reimbursement of their legal costs.

Finally, the judge directed that copies of her order be sent to legal disciplinary authorities in New York, where Blanche is licensed to practise law, and in Washington, DC, where Associate Attorney General Stanley Woodward, the Justice Department's third-highest-ranking official, is admitted to the Bar.

 
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