Judge condemns settlement of Trump’s lawsuit against IRS as self-dealing


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A federal judge sharply criticized President Donald Trump’s $10 billion lawsuit against the Internal Revenue Service, calling it an abuse of the judicial process. In her scathing ruling Monday, U.S. District Judge Kathleen Williams lambasted the Trump administration, saying the lawsuit was an inside play and the lawyers should be penalized. 

The judge also barred Trump from claiming that a key part of a settlement of the lawsuit — immunity from past tax liability for him, his businesses and his family — is legitimate.

Williams referred a Trump attorney, Alejandro Brito, to the Florida Bar to face potential disciplinary action. She also limited the ability of another Trump attorney, Daniel Epstein, to practice law in the Southern District of Florida, unless he meets certain conditions.

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Trump sued the IRS and the Treasury Department — two agencies under the president’s control — early this year, saying he was harmed when a contract worker leaked his tax documents. A settlement agreement with the Justice Department, also under the president’s control, not only gave Trump tax relief, it called for the creation of a $1.8 billion “anti-weaponization fund” that would compensate people who claimed they had been targeted for federal prosecution because of their political beliefs. Acting Attorney General Blanche said last month that the administration would not move forward with the fund.

In her order, Williams noted Blanche’s close association with the lawsuit and settlement. Six days after the settlement was announced, she wrote, “President Trump nominated Mr. Blanche to permanently serve as Attorney General of the United States.” 

The ruling came two days before the Senate Judiciary Committee is expected to begin Blanche’s confirmation hearings.

Williams said Trump’s lawsuit and settlement were self-dealing, writing that Trump “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.”

“Here, Defendants are the Treasury Department — an Executive agency — and the IRS, the largest bureau of the Treasury Department,” Williams wrote. “Both Defendants are unquestionably part of the Executive Branch and ultimately answer to its Chief Executive, President Trump.”

The federal judge cited a recent Supreme Court decision, Trump v. Slaughter, which expanded the president’s executive power over independent commissioners and agencies.   

“President Trump’s authority to appoint and remove federal officers as he sees fit is evidence of his ability to exercise control over Defendants,” the ruling states. “President Trump’s supervisory authority directly implicates two key individuals acting on behalf of Defendants: Scott Bessent, the Secretary of the Treasury Department and Acting Commissioner of the IRS, and Frank J. Bisignano, the Chief Executive Officer of the IRS.” 

In plain terms, the judge said that civil lawsuits cannot be controlled by the same person on both sides, by one who holds power over both the plaintiffs and the defendants.

‘Scorching condemnation’

One of the nearly three dozen retired federal judges who asked Williams to reexamine the case praised her ruling.

“This is a scorching condemnation of what Judge Williams clearly finds to be a considerable and unprecedented abuse of the federal judicial process,” former Judge  John Jones III, who was appointed by President George W. Bush, told Straight Arrow on Monday. “The judge clearly delineates the factual panoply and in so many words accuses the Trump plaintiffs and their counsel of insulting her intelligence.”

Jones added that the reprimand of Trump’s attorneys is significant. 

“Referring lawyers to state disciplinary authorities is a major sanction, particularly when one of the lawyers is the acting attorney general of the United States who is about to attend his confirmation hearing,” the retired judge said. “The timing of this opinion could hardly be worse for Mr. Blanche.”

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Center-rated reporting

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Why this story matters

A federal judge has voided a legal settlement that would have shielded President Trump, his businesses and his family from past tax liability and blocked IRS audits, directly affecting how executive power over federal agencies can be used in litigation.

Tax immunity blocked

The judge barred Trump from claiming the settlement's grant of immunity from past tax liability for himself, his businesses and his family is legitimate.

Taxpayer fund canceled

A proposed $1.8 billion fund, drawn from taxpayer resources and intended to compensate people who claimed political targeting by federal prosecutors, will not move forward, according to Acting Attorney General Blanche.

Attorneys face discipline

One Trump attorney was referred to the Florida Bar for potential disciplinary action and another was restricted from practicing in the Southern District of Florida unless he meets specific conditions set by the court.

Straight Arrow
Fear No Fact.

Don't just take our word for it.


Center-rated reporting

According to media bias experts at AllSides

AllSides Center-rated reporting May 2026

Transparent and credible

Awarded a perfect reliability rating from NewsGuard

100/100

Welcome back to trustworthy journalism.

Find out more

Bias comparison

  • Media outlets on the left turn the ruling into a broader exposé, spotlighting “manipulate,” “bad faith,” and the $1.776B “Anti-Weaponization Fund” as signs of a scheme.
  • Not enough unique coverage from media outlets in the center to provide a bias comparison.
  • Media outlets on the right stay narrower, centering the judge’s “improper purpose” finding and “sanctions” in a more restrained legal frame.

Media landscape

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204 total sources

Key points from the Left

  • U.S. District Judge Kathleen Williams ruled that President Donald Trump's $10 billion lawsuit against the IRS was filed in bad faith with an improper purpose to manipulate the judicial process and confer immunity while spending taxpayer funds.
  • The judge found no true adverseness in the case, stating Trump controlled the IRS and Treasury, making the lawsuit collusive and jurisdictionally improper.
  • Williams sanctioned several parties involved, including Acting Attorney General Todd Blanche and Trump attorney Alejandro Brito, referring them to their respective bar associations for disciplinary review.
  • Judge Williams barred Trump and associated parties from citing the purported settlement agreement in any official proceedings, noting the legal action was a sham case aimed at tax immunity and taxpayer-funded benefits.

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Key points from the Center

  • On Monday, District Judge Kathleen Williams ruled that President Donald Trump's lawsuit against the IRS was filed for an "improper purpose," characterizing it as self-dealing in which he sued an entity effectively under his control.
  • The lawsuit sought to "manipulate the judicial process" by attempting to create an anti-weaponization fund and grant amnesty to the Trump Organization for past tax issues.
  • Williams also criticized the Justice Department, stating it entered a "settlement" that "disregarded DOJ policies" and exceeded legal authority in abdicating its responsibility to defend the United States.
  • The judge referred Associate Attorney General Stanley Woodward and Attorney General Todd Blanche to disciplinary boards in New York and Washington, while a private attorney was referred to the Florida Bar and barred from the Southern District for one year.
  • A spokesperson for Trump's legal team claimed the IRS wrongly allowed a "rogue" employee to leak confidential information to the New York Times and ProPublica, stating Trump continues to hold those who wrong America and Americans accountable.

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Key points from the Right

  • An Obama-appointed federal judge ruled that President Donald Trump's $10 billion lawsuit against the IRS was filed for an improper purpose to legitimize a controversial Justice Department settlement and referred Trump's lawyer Alejandro Brito to the Florida Bar for possible disciplinary action.
  • The judge found that Trump controls the IRS and Treasury, meaning the plaintiffs and defendants were effectively on the same team, undermining the lawsuit's legitimacy.
  • The judge criticized Acting Attorney General Todd Blanche for misleading court testimony and referred him and other officials for potential disciplinary review.
  • The proposed $1.8 billion Anti-Weaponization Fund from the settlement faced political backlash, was scrapped, and the court declared the settlement null and barred its citation in future legal actions.

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