Judge Reopens Trump-vs-DOJ Deal

Sign on the exterior wall of the Department of Justice building

Trump’s lawyers are now defending a $1.776 billion taxpayer-funded deal where the president essentially sued his own government — and a federal judge just reopened the case to find out if the whole thing was a fraud.

Story Snapshot

Trump sued the Internal Revenue Service (IRS) in January 2026 over the leak of his tax returns, then his own Justice Department settled the case for $1.776 billion in taxpayer money.
Acting Attorney General Todd Blanche announced the “Anti-Weaponization Fund” on May 18, 2026 — the same day Trump’s team dropped the lawsuit.
Thirty-five former federal judges filed a motion calling the deal a “fraud on the court,” prompting Judge Kathleen Williams to reopen the case.
Under pressure, the Justice Department (DOJ) later abandoned the fund entirely, but the settlement’s broader terms — including blocking IRS audits of Trump and his family — remain under scrutiny.

Trump Sued the IRS — Then His Own DOJ Settled It

On January 29, 2026, President Trump filed a personal lawsuit against the IRS over the illegal leak of his tax returns by a contractor. The unusual part: the DOJ, which reports directly to Trump, was supposed to defend the IRS. Trump himself joked to reporters that he was “meant to negotiate a resolution with myself.” On May 18, his team dropped the lawsuit. That same day, Acting Attorney General Todd Blanche announced a $1.776 billion “Anti-Weaponization Fund” as part of the settlement.

The DOJ said the fund would pay people who suffered from “weaponization and lawfare” by the government. The money would come from the Treasury’s Judgment Fund — a pool of taxpayer dollars used to pay legal settlements. A five-member commission, appointed by the Attorney General, would decide who gets paid. Trump could fire any commission member at will. The DOJ stated Trump and his sons would receive “no monetary payment,” but the deal also barred the IRS from pursuing tax audits of Trump, his family, and his businesses for returns filed before the settlement date.

What Trump’s Lawyers Are Arguing

Trump’s attorneys Alejandro Brito and two colleagues filed a brief with U.S. District Judge Kathleen Williams defending the deal. They argued there is “no proof” of “collusion or fraud” in the case. They said the DOJ had the right to settle any lawsuit on its own terms, regardless of who filed it. The government’s choice not to fight every legal claim, they wrote, is a normal “litigation judgment” — not a sign of fraud. They called any suggestion of a rigged deal “speculation.”

The lawyers also argued the settlement’s legitimacy does not depend on the court keeping oversight of the case after it was dismissed. They pointed out the DOJ never filed a formal answer or motion in the case, but said that absence alone does not prove anything improper. In their view, the DOJ evaluated the merits of Trump’s claims and reached what they called “a fully appropriate government settlement.”

Judges Push Back — And the Fund Gets Scrapped

Thirty-five former federal judges disagreed. They filed a motion calling the deal a “fraud on the court” and arguing Trump was effectively on both sides of the negotiation. Judge Williams agreed the concerns were serious enough to reopen the case. She ordered Trump’s legal team to respond to the fraud allegations. Former federal judge Nancy Gertner put it plainly: “What happened in this case was, essentially, Trump was suing himself.”

Facing bipartisan criticism, Acting Attorney General Blanche announced the DOJ would not move forward with the $1.776 billion fund at all. “We are not moving forward with the fund, period,” Blanche told lawmakers. Two separate federal lawsuits had also been filed on May 22 seeking to block the fund, arguing it lacked congressional approval, had no legal basis, and was built to avoid public accountability. Both suits called the fund “purpose-built to insulate the administration from public scrutiny.” The case remains open, and the broader settlement terms — especially the IRS audit shield for Trump and his family — are still being challenged in court.