A federal judge said Monday that a controversial lawsuit filed by President Donald Trump against the IRS was intended to “manipulate the legal process” and that he acted in bad faith in filing it.
U.S. District Judge Kathleen Williams orders sanctions against lawyers involved in a lawsuit that led to an attempt to create a now-defunct $1.8 billion anti-gun fund for the president’s allies. It was also used to justify the Trump administration’s order granting amnesty to the president and his businesses for any past tax problems.
Williams’ 56-page opinion criticized the conduct of both the Justice Department (which argued the administration’s response to the case ignored DOJ policy and possibly the law) and the private lawyers who filed the lawsuit on Trump’s behalf.
“The nature of the lawsuit itself, as well as the conduct of the parties and counsel since its filing, make clear that this was an attempt to use the Court to lend some legitimacy to an agreement to grant immunity to people and entities associated with the President and to allocate billions of dollars from American taxpayers to resolve grievances not defined in law,” the judge wrote.
She ordered that her opinion be submitted to the bar disciplinary panels in New York and Washington, D.C., which are reviewing pre-existing ethics complaints against acting Attorney General Todd Blanche and Assistant Attorney General Stanley Woodward.
“By abdicating its responsibility to zealously protect the interests of the United States, the Government entered into a ‘settlement agreement’ that deviated from its position at trial in similar actions, ignored Department of Justice policy, and pursued goals beyond those permitted as well as those specifically prohibited by law,” Williams wrote.
The judge also referred one of the private lawyers who represented Trump in the case to the Florida Bar for possible disciplinary proceedings and barred another lawyer who represented Trump from appearing in court in the Southern District of Florida next year.
Williams’ opinion comes in response to a request by a group of retired judges, filed after she dismissed the lawsuit, to scrutinize the deal. A new order from Williams, an appointee of President Barack Obama, indicates that retired judges may be entitled to reimbursement for their legal fees.
Lawyers for the former judges called Monday’s decision “a resounding victory for the rule of law.”
CNN has reached out to the Justice Department for comment.
A spokesman for Trump’s private legal team said: “The IRS wrongly allowed a rogue, politically motivated employee to leak private and confidential information about President Trump, his family and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally shared with millions of people. President Trump continues to hold accountable those who harm America and Americans.”
The settlement between the IRS and Trump this year stems from a significant leak of tax information on thousands of wealthy people, including Trump, by a government contractor six years ago.
In 2023, the man, Charles Littlejohn, was charged with leaking tax information to the media while working for a contract consulting firm with the IRS. He pleaded guilty in 2024 and was sentenced to five years in prison.
Trump’s Justice Department announced in May that it had reached a settlement with the president over the leaks, which included a $1.776 billion fund for those who believed the Justice Department had unfairly targeted them.
Amid significant backlash from Republicans and Democrats, Blanche told lawmakers last month that the fund was defunct, but he rejected a federal judge’s request to provide a signed statement saying the fund no longer exists.
More importantly for Trump, the agreement included a Blanche memorandum, which was quietly added to the Justice Department’s settlement announcement the next day, prohibiting the IRS from investigating Trump, his family or his businesses for past tax problems or even other types of claims brought by the federal government for any conduct leading up to the deal.
Even before Williams’ ruling Monday, it is unlikely that Blanche’s amnesty order would have stopped a future Democratic administration from investigating Trump, given the dubious legal basis surrounding the agreement.
But the judge’s new order could undermine any attempt by Trump to use the purported agreement as a defense in court if a future administration sues him, his family or his business.
Williams wrote at length about the Justice Department’s approach to the lawsuit—and how it “remained conspicuously absent and silent when serious questions about the matter were raised”—to explain why she concluded it was not a legitimate legal dispute.
But she also hinted that Blanche and Woodward may have specifically violated attorney ethics laws by signing a deal that the judge said was illegal.
She suggested that the two Justice Department officials should have recused themselves from working on the dispute because they were serving as private attorneys representing clients who stood to benefit from the resolution of the case.
Blanche served as Trump’s lawyer in various criminal cases before the president returned to the White House, while Woodward represented the Capitol riot defendants and a Trump aide prosecuted alongside the president in a classified documents case.
The anti-gun fund was “based” on the Jan. 6, 2021, claim settlement as well as the secret documents case, the judge noted Monday.
Justice Department Not Moving Forward on Gun Fund Project, Blanche Says
Justice Department Not Moving Forward on Gun Fund Project, Blanche Says
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“Rather than either retract their prior statements or vigorously defend this lawsuit, as required by DOJ policies and procedures, these lawyers agreed to a ‘settlement’ involving a staggering amount of money, potentially benefiting former clients,” Williams wrote.
The judge also said the second part of the settlement, a tax amnesty order signed by Blanche alone, “directly contradicts” federal law prohibiting presidents and other executive branch leaders from influencing tax audits.
Williams said that “agreeing to any such request is completely inconsistent with the responsibilities of DOJ attorneys (as well as IRS Director General (Frank) Bisignano) to enforce the law and protect the public interest,” raising the possibility that the order is also unconstitutional.
The opinion comes as Blanche is scheduled to appear before the Senate Judiciary Committee on Wednesday for a confirmation hearing to become the permanent head of the Justice Department. Williams wrote in a footnote that she was “extremely troubled” by testimony Blanche gave while on the Hill in May when he said the court had no role in renegotiating the agreement.
“While this response is accurate in timing, it is misleading at best and disingenuous at worst,” she wrote.
This story has been updated with additional details.