A federal judge in Florida has dismantled a controversial settlement between the Trump administration and the president's legal team over a $10 billion lawsuit involving leaked tax returns, declaring the entire case a sham designed to confer improper benefits on the president.
US District Judge Kathleen Williams rejected the agreement that had been negotiated earlier this year, finding that the lawsuit itself was never legitimate. The case had alleged that Trump and his sons suffered damages from the disclosure of his tax information.
The original settlement had spawned immediate bipartisan criticism. It included plans for an $1.8 billion fund ostensibly meant to compensate victims of government overreach, plus immunity from future tax audits for the president and his family. The acting attorney general, Todd Blanche, scrapped the compensation fund following the backlash but allowed the audit immunity to persist.
Williams, who was appointed by Barack Obama, found fundamental flaws in how the case proceeded. She noted that Trump controlled the Treasury Department during the litigation, making any genuine dispute impossible. A lawsuit requires an actual controversy between truly opposing parties, a basic constitutional requirement.
"The nature of the suit itself and the conduct of the parties and counsel from its filing make plain that this was an attempt to use the court 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," she wrote.
The 56-page ruling provides specific evidence of bad faith. One of Trump's lawyers, Daniel Epstein, never sought permission to practice in the Florida federal court where the case was filed, even though he had done so in other cases. Williams interpreted this as proof he never intended to actually litigate the matter.
She also flagged that the Justice Department never addressed obvious legal obstacles, including whether the immunity arrangement violated the constitutional emoluments clause or statutes prohibiting the president from directing audits of particular taxpayers.
Perhaps most damning, Williams observed that Blanche's unilateral ability to cancel the compensation fund portion of the settlement demonstrated the parties were never genuinely adverse. "Acting Attorney General Blanche's apparent capacity to speak for both plaintiffs and defendants, sign a 'settlement' document on behalf of all parties to this action, and then repudiate part of that agreement, demonstrates that there was only one party whose interests were being represented throughout this case," she stated.
The judge issued sanctions against multiple attorneys. She referred Alejandro Brito, another Trump lawyer, to the Florida bar for potential disciplinary action and barred Epstein from appearing before her court for one year. She also referred Blanche and Associate Attorney General Stanley Woodward to bar authorities in New York and Washington, D.C., where they already face separate disciplinary proceedings.
Williams reopened the case after retired federal judges urged her to reconsider it. Trump had initially withdrawn his claims when the settlement was announced, prompting her to close the docket. The new ruling prevents any party from citing the settlement agreement in future proceedings.
The judge also ordered Trump's side and the government to pay the legal costs incurred by retired judges and other organizations that filed supporting briefs in the case.
Blanche is set to appear before Congress on Wednesday for a confirmation hearing as the Senate considers his nomination to be the permanent attorney general. The settlement is expected to dominate that hearing.
Reform advocates say the court decision, though decisive, does not eliminate the need for congressional action. "The court's decision is important, but does not remove the need for congressional action to nullify the entire deal and to prevent any similar attempts at presidential self-dealing in the future," said Brandon DeBot, policy director at the Tax Law Center.
Author James Rodriguez: "Williams did not hold back, and for good reason, the whole arrangement was rigged from the start."
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