What to know about Trump’s $1.8 billion taxpayer-fueled fund for his allies

By Tierney Sneed, Devan Cole, CNN

The unprecedented lawsuit President Donald Trump brought against the Internal Revenue Service over the unauthorized disclosure of his tax returns years ago has led to an unprecedented arrangement that will make nearly $1.8 billion in taxpayer funds available to allies of the president who say they were unfairly investigated by the government in the past.

The announcement of the “Anti-Weaponization Fund” by the Justice Department on Monday immediately drew criticism from Democrats, public interest groups and former government officials who argued that Trump was using the levers of the government he controls to set up a vast piggybank for his supporters.

“It’s highly unusual. It seems to me that it’s a fairly thinly veiled attempt to funnel federal money to people that are sympathetic to the president’s cause and points of view without following the kind of usual procedures,” said retired Judge William Smith, who was appointed to the federal bench in Rhode Island by former President George W. Bush.

Later Monday, the federal judge in Miami who had been overseeing the case agreed to fully close the matter – scrambling hopes from some corners of the legal community for her to scrutinize the behavior of the Trump Justice Department attorneys and Trump’s personal lawyers who were involved in the lawsuit.

Legal experts, meanwhile, appeared torn over whether anyone opposed to the deal would have the ability to mount an effort in court to frustrate the settlement, which they agreed was a novel use of the legal system to advance Trump’s policy goals.

Here’s what to know about the issue:

What was the basis of Trump’s lawsuit?

Trump sued the IRS in his personal capacity in January over the disclosure of his and his company’s tax returns in 2019 and 2020. The lawsuit – seeking $10 billion in damages – accused the agency of failing to take proper steps to safeguard his sensitive tax information, which was leaked by a government contractor who has since been prosecuted for illegally releasing the returns.

While a law protecting the privacy of taxpayers protects the privacy of presidents as well, it was notable that a sitting president was suing an agency his administration controls.

“I am unaware of any other president suing the IRS in the manner that Trump has chosen to do,” said Joseph J. Thorndike, a contributing editor with Tax Notes magazine, who pointed out that President Richard Nixon’s tax returns were leaked. “And as a result, I’m not aware of the IRS having settled any suit with a sitting president.”

“The president is at top of the executive branch, when he sues the executive branch, he is in effect suing himself,” said Stacey Young, a former longtime attorney at the DOJ who now leads Justice Connection, which opposes politicization of the department.

Controversial claims

The claims Trump was bringing appeared to be barred by a two-year statute of limitations, a clock that starts once someone becomes aware their information has been improperly disclosed.

In the version of the timeline most generous to Trump, he should have filed his claims by October 2025, House Democrats said in a court filing, because he would have certainly known of the disclosure by the October 2023 plea hearing of the government contractor given that one of his personal attorneys showed up to the proceedings on Trump’s behalf.

Secondly, the way the Justice Department folded in the face of Trump’s lawsuit is a dramatic departure from how it’s defended the IRS against similar claims of unlawful disclosure – including in a class action lawsuit brought by other individuals and entities whose tax information was also leaked by the same contractor. The Justice Department unsuccessfully tried to get that case against the IRS thrown out.

Trump himself bragged about how his unique position puts him on both sides of the negotiating table – as both the private plaintiff and the president who oversees the agency defendant. “I am supposed to work out a settlement with myself,” he told reporters soon after the case was filed.

Gregory Sisk, a professor at the University of St. Thomas School of Law and former DOJ attorney, said Trump’s comments underscored “the consequences of having an Executive Branch in which the president is much more involved in the activities of the Department of Justice.”

“In the past, a president wouldn’t come anywhere near being involved with these sorts of issues to avoid even the appearance of any kind of corruption or undue influence,” Sisk said.

What is the ‘weaponization’ fund?

The Justice Department said Monday that to resolve the lawsuit, it was setting up a fund to compensate anyone who has been “victims of lawfare and weaponization,” according to acting Attorney General Todd Blanche, who was once on Trump’s personal legal team for the criminal prosecutions brought against the then-former president by special counsel Jack Smith.

The fund also resolves administrative claims that Trump had brought against the department for the search warrant executed at Mar-a-Lago in the classified documents probe, as well as for the investigation into Russian meddling in the 2016 presidential election.

The payments will come from the DOJ’s Judgment Fund, which is a pot of taxpayer money set aside by Congress for monetary settlements the government reaches.

There will be no partisan requirements to file a claim, the department said. The fund will be run by a commission whose members are chosen by Trump’s attorney general and who can be fired by the president at any time. One of the five members will be chosen in “consultation” with Congress, the statement said.

Adam Zimmerman, a professor at The University of Southern California Gould School of Law who specializes in mass litigation and settlements involving the government, said that while previous presidents have helped broker major settlements in cases involving private entities to advance their agendas, the deal announced Monday is “leaps and bounds away” given the parties involved in the underlying case.

Trump, Zimmerman said, is “leveraging his private persona and his status as a private litigant to accomplish all of these public goals associated with his administration.”

The Justice Department released details of its out-of-court settlement late Monday.

“The idea of a president suing the government and then settling for such a massive amount that is going to go to his allies is so preposterous. Any ethical-thinking lawyer at DOJ should know that,” Young said, arguing that Trump had used the court process to make the compensation fund look more “reasonable” than it was.

Can the fund be stopped?

Though Trump’s opponents face procedural hurdles in trying to stop the deal, his critics are flagging several legal problems with the fund DOJ announced and the lawsuit that prompted it.

Firstly, there is the overarching constitutional mandate that requires a live “case” or “controversy” for a case to proceed in court.

Judge Kathleen Williams – an Obama appointee who sits in Miami, where Trump’s lawsuit was filed – had previously raised concerns about that very issue and had sought briefing from outside lawyers on how to view the question.

Trump’s lawyers argued in filings earlier Monday that Williams had no role to play now that the president had decided to drop the case, and her decision to end it meant that questions around whether it was properly filed will go unanswered.

In her order dropping the case, Williams noted that there is no official record of the deal in court. “Because the Notice does not reference any settlement or include a stipulation of settlement, there is no settlement of record,” Williams wrote.

Furthermore, Williams said that the Justice Department, which is meant to be independent, did not lay out in court why it felt a deal was necessary.

“Defendants – federal agencies represented by the Department of Justice, which has an independent obligation to uphold the ‘public’s strong interest in knowing about the conduct of its Government and expenditure of its resources’ and the ‘fair administration of justice,’– neither submitted any settlement documents nor filed any documents ensuring that settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed,” Williams wrote.

The administration’s critics have also argued that the claims in the Trump lawsuit weren’t even serious enough for DOJ to consider settling in the first place, given the statute of limitations issues and other defenses the federal government could have mounted to it.

Under federal law, the attorney general only has authority to make settlement deals when the government is fending off “imminent litigation,” while the relevant regulations concerning the judgment fund also limits it to “actual or imminent litigation.”

The House Democrats wrote in a friend-of-the-court brief filed minutes after Trump’s dismissal notice on Monday that “a feigned or collusive suit over which no court has jurisdiction – to say nothing about one that has been voluntarily dismissed to avoid a jurisdictional ruling – is not ‘actual or imminent litigation.’”

In response to the new deal, legal observers have floated lawsuits under the Constitution’s Emoluments Clause, which prohibits the president from receiving government payments that go beyond his salary, or under the Administrative Procedures Act, which allows litigants to challenge in some circumstances actions by government agencies that run afoul of the law.

Still, it’s not clear who could show they’re being harmed by the fund in a way that would establish they have standing to challenge it in court. Supreme Court precedent has foreclosed taxpayer standing except in a very limited set of circumstances.

“Standing is always very difficult to get, but it’s not impossible,” Smith, the former judge, told CNN. “So it seems conceivable to me that opposition groups will at least try to assert taxpayer standing.”

“I would be shocked if there isn’t some kind of an effort to stop it in its tracks,” he said.

Is this similar to the Keepseagle case?

The Justice Department statement said there was precedent for the fund, pointing specifically to a compensation program that sprung out of an Obama-era settlement DOJ reached in a case accusing the Department of Agriculture of discrimination against tribal farmers and ranchers.

However, an attorney who was deeply involved in that case, known as Keepseagle v. Vilsack, said that the two circumstances were completely different.

A traditional settlement was approved in the class action case in 2011 and carried out under the oversight of a court. But when the settlement claims were paid, $380 million of the $680 million payout had remained unclaimed and there were no terms in the settlement allowing that money to go back to the government.

After extensive negotiations, the parties agreed to create a program dispersing grants to organizations that served Native American ranching and farming communities – the same communities that were in the original class of the lawsuit.

“That really is the critical issue. You have to serve the same community whose interests were at stake in the litigation that was brought,” said the lawyer who represented the Native Americans behind the case, Joseph Sellers.

A judge oversaw the plan to create that fund and even approved of the criteria it would use to determine who would be eligible for the grants.

“Even then, we had to satisfy the court that the funds were going to be dispersed in a way that served the same interests of the communities that brought the case,” Sellers told CNN.

The Trump-IRS deal contemplates no such judicial oversight of the new fund. In fact, his lawyers’ otherwise brief dismissal notice went out of its way to stress that the judge had no role to play now that he was dropping the case.

Ironically, the Keepseagle fund attracted harsh Republican criticism, and Trump’s first attorney general, Jeff Sessions, issued a memo that barred any DOJ settlement that “directs or provides for a payment or loan to any non-governmental person or entity that is not a party to the dispute.”

Under the current DOJ policy, any settlement that creates a payment program for parties not in a dispute “must have a strong connection to the underlying violation or violations of federal law at issue in the enforcement action.”

CNN’s Casey Gannon contributed to this report.

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