BREAKING NEWS: This $1.7 Billion Trump Settlement Is the Most Corrupt Thing I Have Seen in Forty Years of Practicing Law

This is Thursday night breaking news as reported by ABC.

The Department of Justice, now run by Trump’s former personal defense attorney, is poised to settle the President’s frivolous ten billion dollar lawsuit against his own IRS by creating a one point seven billion dollar taxpayer funded slush fund, controlled by a secret commission Trump appoints and removes at will, to pay his political allies and the January 6 defendants he pardoned, just two weeks before a federal judge in Miami was set to throw the case out as an unconstitutional fraud on the court.

You should be furious. I am.

I am a California trial lawyer. I have seen weak cases, frivolous cases, and collusive cases. What is happening in the Southern District of Florida right now is something else entirely. A sitting president is using the federal courts and the federal Treasury as a personal piggy bank, and the Department of Justice is helping him do it. If that sentence sounds dramatic, stay with me. I am going to walk you through, in plain English, why it is true, and why your tax dollars are about to become a political slush fund.

Three Reasons Why This Lawsuit Was Dead On Arrival

The Two Year Statute of Limitation

Trump filed this case on January 29, 2026, two years to the day after Charles Littlejohn was sentenced. Littlejohn is the former IRS contractor who leaked tax return information belonging to Trump and thousands of other wealthy Americans to the New York Times and ProPublica between 2018 and 2020. He pleaded guilty in October 2023 and drew a five year sentence in January 2024. Those are the facts. Now here is what is wrong with the case from a legal standpoint, because this part matters.

The statute Trump sued under, 26 U.S.C. section 7431, has a two year window measured from the date the taxpayer discovers the unauthorized disclosure. The leaks were publicly reported in the New York Times starting in September 2020. The leaker pleaded guilty in open court in October 2023. Trump did not file until January 29, 2026. Take the trigger date most generous to Trump, October 2023, and his filing is still outside the window. Take the earlier trigger date of September 2020, when the published reporting made the unauthorized disclosure public knowledge, and his filing is more than five years late. The Ninth Circuit has held that this two year period is jurisdictional. Any honest defense lawyer files a motion to dismiss on day one. Any honest Justice Department does the same. The DOJ in this case did neither.

No Damages

Then there is the damages theory. Ten billion dollars. Here is how the statute actually works. Under 26 U.S.C. section 7431, a taxpayer harmed by an unauthorized disclosure of tax return information can recover the greater of actual damages or one thousand dollars per act of unauthorized disclosure by the government, plus punitive damages if the conduct was willful or grossly negligent. One thousand dollars. Per government act.

To reach ten billion dollars at that statutory rate, Trump’s lawyers have to argue that every single reader of every New York Times and ProPublica article counts as a separate act of disclosure. Think about what that means. A single leaked document, published once, read by ten million people online, becomes ten million separate acts of disclosure at one thousand dollars each. That is how you manufacture a ten billion dollar number out of a statute Congress designed to pay one thousand dollars at a time. Federal courts have looked at that theory and rejected it. In Miller v. United States, 66 F.3d 220 (1995), the Ninth Circuit held that when an IRS agent discloses return information to a reporter who then publishes it, the disclosure is one act, not multiplied by every person who later read the article. The Second Circuit reached the same conclusion in Minda v. United States in 2017, holding that each act under the statute refers to each act of disclosure by the government, not each item of information later seen by the public. The ten billion dollar figure is not a damages calculation. It is a political talking point with a dollar sign in front of it.

Then there is the biggest problem of all. The Constitution.

Article III of the Constitution requires a real case or controversy. Federal courts cannot hear friendly lawsuits. They cannot rule on hypotheticals. They cannot issue advisory opinions. They cannot rubber stamp a deal between two sides that secretly want the same outcome. The Framers built that wall in 1787 to keep the judiciary from becoming a tool for political theater dressed up in legal robes. Now apply that wall to what is happening in Miami.

Trump is the plaintiff. Trump is also the President of the United States. Trump nominated the Attorney General. Trump signs the checks at the Treasury. Trump controls the IRS through the Treasury Secretary he appointed. Trump has issued an executive order forbidding government lawyers from taking legal positions that contradict his own. Trump publicly admits the decision to pay the settlement has to come across his desk. Where is the adversary in that picture? There is none. There is one man, wearing two hats, suing himself, and writing the check to himself.

The Supreme Court has seen this movie before and shut it down every time. In Muskrat v. United States in 1911, the Court threw out a lawsuit Congress had created specifically to test the constitutionality of a statute, because the parties were not genuinely adverse. The Court called it what it was, a friendly suit, and held that federal courts have no power to decide friendly suits. In United States v. Johnson in 1943, the Court did it again. A landlord and a tenant teamed up to challenge the constitutionality of a federal rent control statute, with the landlord paying both sides of the case. The Supreme Court held in a per curiam opinion that the proceeding was not in any real sense adversary and that, once such a defect is brought to the court’s attention, the court has both the power and the duty to dismiss without reaching the merits. And in In re Murchison in 1955, the Court laid down the bedrock principle of American due process. No person may be a judge in his own case. Read those three decisions together and tell me how Donald Trump can sue Donald Trump’s IRS, defended by Donald Trump’s hand picked Justice Department, with the settlement decision running across Donald Trump’s desk, and call any of it a real adversarial lawsuit. You cannot. No honest lawyer can. And Judge Williams, sitting in Miami, knows it.

We talked about this earlier today during my interview on Meghna Chakrabarti’s outstanding “On Point” radio show. Great conversation. Take a listen here.

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The Judge Saw It Coming

Here is the part the White House did not want you to hear about. United States District Judge Kathleen Williams, who has sat on the Southern District of Florida bench since 2011, did exactly what federal judges are supposed to do when something smells wrong. On April 24, 2026, on her own motion, she stayed the case. She ordered both sides to brief whether a genuine case or controversy exists under Article III. She set a hearing for May 27, 2026 in Miami at 10 a.m. She designated six respected lawyers, unaffiliated with the case, to give her their views on whether this lawsuit is even legitimate. That designation came on top of separate amicus briefs already filed by a group of former IRS and Justice Department officials and by Citizens for Responsibility and Ethics in Washington.

Federal judges almost never do that. When a judge orders parties to defend their right to be in court at all, that judge is telegraphing serious skepticism. Her order reads like a brief against the lawsuit. She pointed out that the Attorney General has a statutory obligation to defend the IRS when it is hailed into court, while at the same time being required by Trump’s own Executive Order 14215 to take legal positions consistent with the President’s view of the law. Trump signed that order on February 18, 2025. It says no executive branch employee may advance a legal interpretation that contravenes the President’s opinion, including positions advanced in litigation. A federal judge is now using Trump’s own executive order as evidence that the two sides of this lawsuit are not truly opposed to each other. You cannot make this up.

She also noted that Trump claims to be suing in his personal capacity while sitting as President of the United States, with his named adversaries being agencies whose decisions are subject to his direction. Her language was careful, judicial, restrained. The implication was unmistakable. On May 27, she was on track to rule the case lacked subject matter jurisdiction and toss the whole thing.

That is what the settlement is designed to prevent.

The Slush Fund

Now look at what they are reportedly building in place of the lawsuit, because this is where my blood pressure starts to climb.

Under the proposed deal, Trump drops the ten billion dollar IRS lawsuit. He also drops a separate frivolous two hundred and thirty million dollar administrative claim tied to the Mar-a-Lago search and the Russia investigation from his first term. In exchange, the federal government creates a one point seven billion dollar fund drawn from the Treasury Department’s Judgment Fund, a permanent appropriation meant to pay court judgments and settlements, not to compensate political grievances. A five member commission controls the fund. Members serve at Trump’s pleasure. He removes them without cause. The commission has no obligation to disclose its procedures, its decision making process, or the identities of the recipients. Awards issue by majority vote. Any leftover money returns to the government shortly before Trump leaves office.

Think about what that means. A commission picked by Trump, removable by Trump, accountable to no one, handing out more than a billion taxpayer dollars in secret, to people Trump and his allies define as victims of Biden era weaponization. The eligible recipients include the nearly sixteen hundred individuals charged in connection with the January 6 attack on the United States Capitol, every one of whom Trump pardoned after taking office in January 2025. The eligible recipients also include entities associated with Trump himself. The settlement language reportedly bars Trump from receiving direct payments tied to the three legal claims he is dropping. It does not bar Trump organizations from filing fresh claims.

Read that again. Slowly.

This is taxpayer money. Your money. My money. Money that comes out of every paycheck in this country. If the settlement moves forward, it is being directed, through a sham settlement of a frivolous lawsuit, to convicted felons who attacked the Capitol on January 6, to political allies of the President, and quite possibly to business entities the President himself controls. No congressional appropriation. No inspector general oversight. No transparency. No meaningful judicial review. No consequence for fraud.

In his own words last October in the Oval Office, Trump admitted the obvious. He said it sort of looks bad. He said the decision would have to go across his desk. He said it is awfully strange to make a decision where I am paying myself. Those are his words. He understood the conflict. He proceeded anyway.

Where The Department Of Justice Failed You

This is the part that makes me ill as a lawyer.

The Department of Justice exists to defend the United States and its citizens. The Attorney General takes an oath to the Constitution, not to the President personally. When a frivolous lawsuit lands on the DOJ’s desk, especially one filed by the man who sits atop the executive branch, the lawyers in that building are supposed to do their job. File the motion to dismiss. Raise the statute of limitations. Raise the failed damages theory. Raise Article III. Raise Rule 11 of the Federal Rules of Civil Procedure for filing a frivolous case. Tell the judge the truth.

That did not happen here.

Todd Blanche, the Acting Attorney General of the United States as of April 2026, was Trump’s personal criminal defense lawyer in three of the four criminal cases brought against him before he returned to the White House. He defended Trump in the New York hush money trial that produced thirty four felony convictions. He defended Trump in the federal classified documents case. He defended Trump in the federal election interference case. The Senate confirmed him as Deputy Attorney General in March 2025. After Trump fired Pam Bondi on April 2 of this year, Blanche stepped into the top job. He now runs the Department of Justice that is reportedly negotiating against (or for depending on your point of view) the very client he represented for years.

If you ever wondered what a weaponized Department of Justice looks like in practice, look at that paragraph. Then look at the one point seven billion dollar number.

Most experienced trial lawyers I know look at the IRS case and see a guaranteed loser for Trump. Dismissal on the statute of limitations. Dismissal on Article III. Sanctions under Rule 11 for filing a frivolous case. The federal government had every tool needed to make this lawsuit disappear at zero cost to the taxpayer. The Department of Justice apparently is choosing to settle instead. Not because the case had merit. Because the people running the Department of Justice work for the man who filed it.

The Constitutional Crisis Hiding In Plain Sight

Step back and look at the architecture of what is happening, because this is bigger than one lawsuit and one settlement.

The President of the United States sued his own government. His Attorney General is his former personal lawyer. His executive order forbids government attorneys from taking legal positions that contradict his views (read that again—it’s unbelievable this executive order isn’t headline news in and of itself). The federal judge who tried to stop the collusion has limited power to prevent a voluntary settlement once both parties decide to walk away from the court. The settlement creates a private fund of your tax dollars, controlled by a commission he handpicks, paying political allies whose identities are kept secret.

Every piece of that machinery violates a principle the Founders considered foundational. Separation of powers. Adversarial process. Due process. Protection of public funds. Checks and balances. No person above the law.

Federal courts have spent two and a half centuries policing the line between a real lawsuit and a friendly one, because the Framers understood that a government willing to fake adversity in court is a government willing to fake everything. Judge Williams understood that. She wrote it down in her order. She set the hearing. She designated the advisors. She did her job. The Department of Justice is now working to make her job impossible.

If this settlement goes through, the precedent it sets will outlast Trump, Blanche, and every name on the front page tonight. Any future president of any party will point to it and say, look, the system already allowed it once. A sitting president, suing his own government, settling with himself, paying his friends, all sanctioned by a Department of Justice that nodded along.

What You Do Now

You are not powerless here. Outrage alone changes nothing. Pressure changes things.

Call your senators. Call your representative. Their phone numbers and email addresses are on their official websites and on the Congressional directory. Tell them you want hearings. Tell them you want the Government Accountability Office to investigate the use of the Judgment Fund for this purpose. Tell them you want every member of the commission named publicly. Tell them you want every recipient of every dollar disclosed. Tell them you want a vote on the bill House Democrats introduced earlier this year to bar January 6 defendants from collecting taxpayer payouts.

Talk to your neighbors. Talk to your family. Share this story with people who do not follow legal news, because the people who designed this fund are counting on the technicalities being too boring to break through. They are not boring. They are the difference between a constitutional republic and something that wears the costume of one.

Show up to vote in 2026. Vote in your primaries. Vote in the midterms. Vote in your local races. Federal judges, state attorneys general, and members of Congress are the only constitutional brakes left on what is being attempted right now in Miami and at Main Justice.

I have spent forty years in courtrooms watching the American legal system at its best and at its worst. The system works when good people inside it refuse to look the other way. The system fails when they do. Tonight, it’s being reported that the Department of Justice is going to look the other way on the biggest scale I have seen in my career. The hearing in Miami on May 27 is two weeks away. If this settlement closes before then, Judge Williams loses her chance to rule. The American people lose one point seven billion dollars. And the country loses something more important than money.

Do not let it pass quietly. Share this. Talk about it. Make noise. Call. Write. Vote. The Constitution is not self enforcing. It survives because Americans demand that it survive. Tonight is one of those nights where the demand has to be loud.

Mitch Jackson, Esq.

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