Judge voids Trump v. IRS deal, refers lawyers to bars
The "collusive" lawsuit was the basis for the $1.776 billion slush fund and tax audit release order.
A federal judge on Monday nullified a purported settlement that served as the basis of Donald Trump’s attempt to create a $1.776 billion slush fund for his political allies and immunize himself and his family from taxpayer audits.
In a 56-page order, U.S. District Judge Kathleen Williams excoriated Trump v. Internal Revenue Service as 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.”
Affirming that Trump is “bound by the rules” of the court, Williams added: “Ensuring that our courts are used only for the express purpose created by the Constitution is the obligation of every judge and an obligation that this Court must discharge in light of the matter before it.”
She barred any of the parties to the lawsuit from “using, offering, admitting, or citing” the purported settlement in any “judicial, administrative, regulatory, arbitration, or any other official proceeding.”
‘Such transitions do not absolve counsel’
In another portion of her ruling, Judge Williams laid down the hammer on multiple Trump-linked attorneys, two of whom now occupy senior leadership positions within the Justice Department.
Williams also referred Trump’s Florida-based personal lawyer Alejandro Brito to The Florida Bar for possible discipline. Brito has represented Trump in several defamation lawsuits against news organizations, including the BBC, ABC, and The New York Times.
She likewise ordered the clerk to forward a copy of her order to the State Bar of New York and the D.C. Bar, where she noted that “disciplinary proceedings are currently ongoing” against Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward, respectively. She noted that Blanche and Woodward both had ties to Trump’s criminal cases. Woodward represented Trump’s co-defendant Walt Nauta in the Espionage Act case over the retention of highly classified documents at Mar-a-Lago, and he also represented multiple witnesses in that case.
“While the Court appreciates that attorneys successfully transition between private practice and government service, such transitions do not absolve counsel of their ethical obligations,” Williams noted in her order.
Williams noted that Blanche’s and Woodward’s former clients stood to benefit from the purported settlement and the $1.776 billion fund it spawned.
“Indeed, these two cases have been referenced as quintessential Anti-Weaponization and Lawfare claims,” the order states. “Instead of either recusing because of their previous representations or vigorously defending this lawsuit as required to do so by DOJ, policies and procedures, these lawyers agreed to a ‘settlement’ involving a staggering amount of money potentially benefiting former clients.”
The New York Times reported that the now-voided IRS release order would have shielded Trump from more than $100 million in tax penalties.
Blanche’s confirmation hearing for attorney general is scheduled to take place on Wednesday and Thursday. The terms of the order would appear to suggest that Blanche will be barred from discussing the purported settlement during those proceedings.
‘A vigorous, independent judiciary’
Trump filed a $10 billion lawsuit against the Internal Revenue Service earlier this year, purporting to seek damages for the disclosure of his tax returns.
During Trump’s first term, former IRS contractor Charles Littlejohn — officially working for Booz Allen — leaked Trump’s tax information to the news media, along with those of hundreds of thousands of people, to shed light on the tax avoidance strategies of the wealthy.
Prosecuted by the Biden-era Justice Department, Littlejohn is currently serving a five-year prison sentence.
In fact, Judge Williams found, there was “no case or controversy” between Trump and the IRS because “one party controls the litigation.”
“Fidelity to the rule of law can be achieved only when the DOJ is free to assess the facts and governing law of each case it reviews without the stain of political interference,” she wrote.
Although the Trump Justice Department argued that it had the power to resolve all disputes, Judge Williams replied that this position answers the wrong question.
“Whether Executive Branch actors can privately agree to give themselves and their former clients blanket immunities and billions of dollars in tax monies for legally undefined grievances was never an issue advanced to this Court,” she wrote. “The question is whether the Parties could do so by claiming to be adverse and engaging the legitimacy of a court proceeding. The answer is a resounding ‘no’: the Lead Plaintiff and the Government are one, a fully realized unitary interest.”
She found that Trump and the federal government under his control advanced the lawsuit for an “improper purpose—to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.”
The judge’s inquiry began after 35 former federal judges filed an amicus brief asking her to reopen the case.
Inviting them to seek monetary sanctions, Williams applauded them for their service in a footnote: “Their thorough and well-reasoned scholarship, and uncompromising commitment to the rule of law—along with those of the organizations and lawyers referenced supra—are hallmarks of a vigorous, independent legal profession critical to sustaining a vigorous, independent judiciary.”
Read the ruling in full here.
This would appear to be massively good news.
I commend Adam's reportorial restraint.
Wonderful news!