By Andrew Goudsward and Dan Rosenzweig-Ziff
WASHINGTON, July 13 (Reuters) – A U.S. judge on Monday found that President Donald Trump improperly used a $10 billion lawsuit he filed against the IRS to extract personal benefits from the government he oversees, preventing the terms of a settlement agreement from taking legal effect.
Miami-based U.S. District Judge Kathleen Williams excoriated Trump’s personal lawyers and attorneys in his administration, concluding their interests were not opposed to each other as is legally required for civil lawsuits. Williams referred a Trump lawyer in the case, Alejandro Brito, and senior Justice Department officials who signed off on the settlement to state bar authorities to determine if their actions violated legal ethics rules.
In a 56-page ruling, Williams concluded that attorneys on both sides of the case – Trump’s personal lawyers and lawyers for the DOJ and IRS – misused the legal system to provide cover for actions aimed at benefiting Trump and his allies.
“This action was never about a party seeking judicial resolution of a legal issue or a factual dispute,” Williams wrote. The judge said it was instead an attempt 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.”
The settlement brokered in May between Trump’s personal lawyers and senior officials at the Justice Department, led Trump to drop the suit in exchange for sweeping tax protections and the creation of a nearly $1.8 billion fund for victims of so-called government weaponization that critics said would benefit Trump’s political allies.
Williams’ order bars any of the parties in the case, including Trump, his adult sons and his namesake company, from referring to the settlement or citing any of its terms in future legal proceedings, a move that could nullify the portion of the agreement barring the IRS from pursuing audits into past tax claims involving Trump or his businesses.
Acting Attorney General Todd Blanche already told Congress that the plan for the weaponization fund would not move forward. The fund was initially aimed at compensating victims of “lawfare” and “weaponization,” terms that Trump has long used to describe legal cases against him and his allies. A federal judge in Virginia last month blocked the Trump administration from setting up the fund.
Trump sued the IRS in January, accusing the agency of not doing enough to prevent the leak of his tax records during his first term in office and initially seeking $10 billion.
The settlement came under withering scrutiny from critics, including some Republican lawmakers, who accused the Trump administration of self-dealing and seeking to funnel taxpayer money to political allies. Blanche, under pressure from Republican senators, agreed to scuttle the weaponization fund, but allowed the tax provision to remain in effect.
A spokesperson for Trump’s legal team did not directly address the court’s ruling, but repeated claims that Trump’s tax records were improperly leaked and said the president “continues to hold those who wrong America and Americans accountable.”
A Justice Department spokesperson did not immediately respond to a request for comment.
Williams’ order comes two days before Blanche, a former personal lawyer to Trump, is set to appear before a Senate panel on his nomination to serve as the permanent attorney general. The IRS settlement agreement was already expected to be a central topic of conversation.
Williams opened an inquiry into the settlement after a group of former judges filed a court brief accusing Trump and his administration of perpetuating a “fraud on the court.” Trump’s lawyers argued that the judge no longer had authority over the case after Trump voluntarily dismissed it.
Williams’ order does not reopen the case, but finds that Trump’s attorneys and government officials should face sanctions. She allowed outside groups that filed court briefs raising concerns about the lawsuit to seek payment for their work.
The judge also directed that a copy of her order be sent to legal disciplinary authorities in New York, where Blanche has his law license, and Washington, D.C., where Associate Attorney General Stanley Woodward, the third-highest-ranking official at the Justice Department, is barred.
(Reporting by Andrew Goudsward and Dan Rosenzweig-Ziff; writing by Susan Heavey; Editing by Chizu Nomiyama and Aurora Ellis)
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