A federal judge has found that President Donald Trump’s lawsuit against the IRS was brought in bad faith and was designed to manipulate the courts, issuing sanctions against lawyers involved in the case. Get today's headlines by email Ruling Faults SettlementUS District Judge Kathleen Williams said in a 56-page opinion on Monday that the case helped support a settlement shielding Trump, his family and his businesses from past tax-related claims and creating a proposed $1.776 billion anti-weaponization fund. The fund, later abandoned, was for people who said they had been unfairly targeted by the Justice Department. Williams said the lawsuit and the parties’ conduct showed an effort to use the court to legitimize benefits for people and entities linked to the president and to allocate taxpayer money for grievances not recognised in law. Lawyers Face ReferralsThe judge ordered her opinion sent to disciplinary authorities in New York and Washington, DC, where ethics complaints involving acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward are already under review. She also referred one private lawyer who represented Trump to the Florida Bar for possible disciplinary action and barred another Trump lawyer from appearing in the Southern District of Florida for one year. Williams said the government failed to defend US interests, departed from its positions in similar litigation and disregarded Justice Department policies. She said the settlement pursued goals that were not authorised or were prohibited by law. The ruling followed a request from retired judges, made after Williams dismissed the lawsuit, asking her to examine the deal. Williams, an appointee of President Barack Obama, said they may be entitled to recover legal fees. Their lawyers called the ruling a victory for the rule of law. Tax Leak BackgroundThe dispute stemmed from a leak of tax records involving thousands of wealthy people, including Trump. Charles Littlejohn, a government contractor working with a consulting firm with IRS contracts, was charged in 2023 with leaking the information to media organisations. 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 him over the leaked records. The deal included the fund for people who believed they were victims of unfair Justice Department targeting. After criticism from Republicans and Democrats, Blanche told lawmakers last month that the fund would not proceed. He has not provided a signed statement to a federal judge confirming that it has been terminated. A spokesman for Trump’s private legal team accused the IRS of allowing a politically motivated employee to disclose confidential information about Trump, his family and the Trump Organization to news outlets, and said Trump would keep seeking accountability. The Justice Department was contacted for comment. DOJ Officials ScrutinisedA separate memorandum signed by Blanche, and added to the Justice Department’s settlement announcement a day later, said the IRS could not investigate Trump, his family or his businesses over past tax matters, or other federal claims based on conduct before the deal. The ruling could weaken any effort by Trump to use the settlement as a court defense if a later administration brings claims against him, his family or his businesses. Williams said the order conflicted with federal law barring presidents and senior executive officials from influencing tax audits. She said complying would conflict with duties of Justice Department lawyers and IRS chief executive Frank Bisignano to enforce the law and protect the public interest, while raising constitutional concerns. The judge said Blanche and Woodward should have considered recusal over their earlier private legal work. Blanche represented Trump in criminal cases; Woodward represented January 6 defendants and a Trump aide prosecuted with Trump in the classified documents case. Williams noted the fund was premised on claims tied to those matters. Blanche is due before the Senate Judiciary Committee on Wednesday for a confirmation hearing to become permanent head of the Justice Department. Williams said she was troubled by his May testimony that the court had no role in reviewing the agreement, calling it misleading or disingenuous. Join the discussion? 14 July 2026
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