A Florida federal judge issued a scathing ruling Monday finding that President Donald Trump filed a $10 billion lawsuit against the Internal Revenue Service for an improper purpose. The judge said the suit was designed to give the appearance of judicial legitimacy to a settlement that had no viable basis in law or fact.
According to a report by CNBC, Judge Kathleen Williams of U.S. District Court in Miami wrote that Trump improperly used the lawsuit to justify specific outcomes, including access to taxpayer funds and exemption from audits and other investigations.
"The Court determines that Plaintiffs 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," she wrote.
The lawsuit stemmed from the leak of Trump's tax records by an IRS contractor. Trump, along with his sons Donald Trump Jr. and Eric Trump and the Trump Organization, filed the suit in January. The case never went to trial. Instead, Trump dropped the lawsuit after reaching an out-of-court settlement with the IRS and the Department of Justice in May.
That settlement had significant consequences. It briefly led the DOJ to create a $1.8 billion fund described as a lawfare compensation fund, intended to pay purported victims of prosecutorial overreach. The fund was later abandoned. The settlement also granted Trump, his family members, and related business entities effective immunity from audits, prosecution, and regulatory enforcement by the IRS for tax returns filed up to the date of the agreement.
Williams was pointed in her analysis of the power dynamic at the center of the case. Because Trump was president when he filed the suit and then settled with government agencies he controls, she found there was never any real legal adversity between the parties.
"There was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail," Williams wrote. "The Lead Plaintiff and the Government are one, a fully realized unitary interest."
The judge also found that a provision in the settlement barring audits of Trump directly contradicts a federal law that prohibits the executive branch from influencing taxpayer audits and other investigations. She further wrote that the conferral of possibly millions of dollars in tax relief by the settlement potentially violates the Constitution's prohibition on increasing a president's compensation during his time in office.
Williams stopped short of explicitly voiding the settlement. In a footnote, she wrote that whether a private agreement between the parties is valid and enforceable is not before the court.
Beyond the ruling itself, Williams took the unusual step of referring Trump's attorney in the case, Alejandro Brito, to the Florida Bar for possible disciplinary review. She also ordered copies of her order sent to the New York State Bar Association and the District of Columbia Bar, noting that acting Attorney General Todd Blanche is a member of the New York bar and Associate Attorney General Stanley Woodward belongs to the D.C. bar. Blanche, who previously served as Trump's criminal defense lawyer, announced the creation of the DOJ compensation fund after Trump dropped the lawsuit. The settlement was never submitted to Williams or any other court for review before it took effect.