Trump's $1.8b slush fund could turn into giant can of worms
At the very least, it'll make the midterms messy.
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On Monday, President Trump “settled” a lawsuit he filed against himself for the low-low price of $1.8 billion of your tax dollars. But he’s not pocketing any of that money, perish the thought!
In an act of characteristic selflessness, Trump is giving it all away to his most loyal supporters, the ones who stormed the Capitol on January 6 and were cruelly victimized by the Biden Justice Department’s campaign of “Lawfare and Weaponization.”
And it’s not just J6-ers invited to queue up for cash. Step right up and collect your payday, clinic harassers, anti-vaxxers, and patriots targeted “based on improper ideological criteria.”
Papa Trump is about to make it rain.
Suing yourself is the ultimate act of onanism
The grift was originally conceived as a plan to enrich Trump himself.
In 2024, the president’s sweatiest lawyer, Daniel Epstein, went on Fox Business and announced that he was suing the government for $100 million. In fact, what he did was file an administrative complaint under the Federal Tort Claims Act (FTCA) alleging various abuses in connection with the raid that turned up hundreds of sensitive government documents at Trump’s private club.
The claim was hopelessly defective — FTCA claims are almost impossible to win against law enforcement officials — and yet last October it emerged that Trump was “settling” with his own administration for $230 million.
In January, Trump struck again.
This time it was a demand for $10 billion from the IRS over the 2020 disclosure of his tax returns by an contractor who leaked thousands of returns of the wealthiest Americans to ProPublica and the New York Times. That suit was even more defective than the first: damages are limited by statute to $1,000 per disclosure, the statute of limitations is two years from the date the disclosure is discovered, and Trump himself controlled the IRS at the time.
There’s also the minor matter that the Constitution limits courts to adjudicating live cases and controversies, and the president openly admitted that he was negotiating with himself because he runs both teams.
Judge Kathleen Williams appointed six learned lawyers to evaluate whether she had jurisdiction to hear a case where the plaintiff and defendant are the same person. The panel suggested that further inquiry was necessary to asses the independence of the lawyers running the DOJ’s case, pointedly noting that the government vigorously fought off similar suits from other victims of the 2020 leak. The New York Times reports that the IRS’s lawyers drafted a 25-page memo in April rubbishing Trump’s suit and urging the Justice Department to fight it.
Instead, the DOJ strategized to cut Judge Williams, a Biden appointee, out of the loop entirely. No attorney for the Justice Department entered an appearance in the case, and a supposedly joint motion to slow proceedings down for 90 days was signed by Trump’s lawyers alone. Procedurally, this ensured that Trump could walk away from the case at any time, without needing the court to punch his ticket.
Under normal circumstances judges have to grant a motion to dismiss a case — which gives them some modicum of discretion to police the terms of any settlement. But when the defendant has neither entered an appearance nor answered the complaint, the plaintiff can simply declare his intent to dismiss and walk away. And so, before Judge Williams could make the government do anything or answer any unpleasant questions, Trump did just that.
The stitch up
On Monday, Acting AG Todd Blanche announced that he was “settling” Trump’s IRS and FTCA claims by establishing an “Anti Weaponization Fund” to compensate the victims of Biden’s dastardly depredations.
“The machinery of government should never be weaponized against any American, and it is this Department’s intention to make right the wrongs that were previously done while ensuring this never happens again,” he simpered. “As part of this settlement, we are setting up a lawful process for victims of lawfare and weaponization to be heard and seek redress.”
The gambit is a three-fer. It allows Trump to sidestep the blowback from literally cutting himself a check from the Treasury, retcon the January 6 attackers into victims, and take credit for righting what a historic wrong. Then he can graciously accept an apology and donate his imaginary court winnings to his supporters, while simultaneously siphoning off a mountain of cash to dole out at his whim with minimal government oversight.
Plus, as an added bonus, the DOJ went back and added a clause barring the government from investigating the Trump family for tax crimes, putting an end to a decades-old audit dispute which could potentially have cost Trump $100 million.
The entire exercise is an elaborate troll, right down to the $1.776 billion price tag, a figure which supposedly represents “the projected valuation of future claimants’ claims” — and, no, they will not be showing their math.
The slush fund will be controlled by a five-member board appointed by Trump and will sunset in the last month of his term. The only oversight of the fund, which is a government agency, will be the attorney general, and Blanche refused to even agree that money shouldn’t go to people convicted of violent felonies against police officers.
It is, as many people have commented, a vehicle for Trump to pay his supporters for the last attack, and maybe prepay for the next one using tax dollars. It’s also flagrantly illegal.
Not how any of this goes
The money is being looted from the Treasury Judgment Fund, which Congress established in 1956 to pay court judgments against the United States. It’s an indefinite appropriation — that is, an elastic pot of cash that doesn’t require an act of Congress to fill it — hence Trump’s ability to reach in and snatch $1.8 billion without legislative input.
Under 31 U.S.C. § 1304 and the implementing regulations, payments from the Judgment Fund must be final, monetary, and authorized by law. A 1989 Office of Legal Counsel memorandum was explicit that the Judgment Fund is available only for “direct payment of specified sums of money.” Blanche’s order creates an ongoing administrative apparatus, covering per diems, staff salaries, travel expenses, facilities, and administrative services — none of which would appear to qualify. And because the $1.8 billion “projected valuation of future claimants’ claims” is a number chosen solely as a troll and untethered to any pending or contemplated litigation, it can’t be a “final” valuation as required by the statute.
The “settlement” also violates the DOJ’s own transparency rules. The Justice Manual (the agency’s internal rulebook) and 28 C.F.R. § 50.23 state that, with rare exceptions, the agency “will not enter into final settlement agreements or consent decrees that are subject to confidentiality provisions, nor will it seek or concur in the sealing of such documents.” But Trump can give the money to anyone he wants, with no oversight other than “a confidential written report that includes the name and address of each claimant who has received any relief” submitted quarterly to the AG.
The only legal authority the government cites is Keepseagle v. Vilsack, a class action filed by Native American farmers alleging persistent discrimination by the Department of Agriculture, which ended with a trust fund to pay discrete sums to people who had actually applied for and been denied loans.
“Previous cases have been settled on similar terms,” Blanche insists, shamelessly pretending that a class action lawsuit on behalf of victims of racial discrimination, litigated for years by adverse parties, resolved by a court-approved settlement, is exactly the same as Trump’s former personal lawyer granting him amnesty for wholly unrelated tax claims going back a decade plus a ten-figure slush fund in exchange for abandoning his bumptious legal claims before a judge could get anywhere near them.
Just hours after the deal was announced, Brian Morrissey, the general counsel for the US Treasury who was appointed by Trump and confirmed by the Senate, resigned.
Case closed, time to sue
A functional Congress would put a stop to this. It could claw back the money, or amend the funding statute, or, in the event of a presidential veto, sue. But we don’t have a functional Congress, and it’s unclear whether courts will find that anyone else has standing to challenge this grotesque corruption in court.
Individual taxpayers have almost no ability to challenge government spending — even if that spending is patently illegal. As the minority, Democratic members of Congress likely can’t vindicate the interests of the legislature in court. And we know from the first Trump administration that the Supreme Court has largely abandoned the Emoluments Clause. But there will certainly be loads of plaintiffs willing to give it a go.
House Democrats filed an amicus brief before Judge Williams and are vowing to continue the fight. Whistleblowers will emerge under the False Claims Act. And the criteria set out in the settlement memo are so vague as to be almost meaningless, thus inviting legal challenge from any applicant whose claim is denied, or who gets less than he hoped for.
Blanche has tried to head this off at the pass with a clause that declares: “Because the claims process is voluntary, there shall be no appeal, arbitration, or judicial review of claims, offers, or other determinations made by The Anti-Weaponization Fund.” But a federal agency can’t contractually zero out laws like the Administrative Procedure Act or the Equal Protection Clause. This slush fund is guaranteed to get sludge-y pretty fast.
There is one other very funny legal angle raised by Brandon DeBot, a senior attorney advisor and policy director at the Tax Law Center at NYU Law. He writes that, because this agreement is cast as a settlement of debt owed to Trump, it should be treated as $1.8 billion of income, which triggers tax liability. At Trump’s rate, that liability could run into the hundreds of millions of dollars, and the IRS lookback period is six years.
Not for nothing, but the next IRS director has the chance to do the funniest thing …
That’s it for today
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Call it what it is.
Public money, laundered through a fake lawsuit, paid out to a private political coalition. The grift isn’t that Trump pocketed it. The grift is that he found a way to spend it on loyalty without going through Congress.
Johan
He’s paying the insurrectionists so they’ll do his further bidding by going to polling places and intimidating voters he doesn’t want to vote.
CREW (Citizens for Responsibility and Ethics in Washington) has filed suit to prohibit this theft of taxpayer funds. I hope and pray they prevail.