U.S. District Judge Kathleen Williams determines the matter never rose to a genuine “case or controversy” because the president controlled both sides.
In a blistering ruling handed down on Monday, a Florida-based federal judge found that President Donald Trump’s January 29 lawsuit against the IRS was essentially a ploy to secure a “settlement agreement” that would bestow vast advantages on him, his family, and his supporters at the expense of U.S. taxpayers. The judge, U.S. District Judge Kathleen Williams, stated that the plaintiffs and the defendants “acted in concert and were never truly adverse,” and she ordered sanctions against Trump’s attorneys. “Because this fact was so obvious and so insurmountable, the Court concludes that this matter was brought for an improper purpose—to obtain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.”
The so-called “settlement,” announced on May 18 by Acting Attorney General Todd Blanche, allocated $1.8 billion of taxpayer money to an “Anti-Weaponization Fund” intended to benefit Trump’s circle. Blanche indicated the following day that the agreement also granted immunity from liability for tax violations and any other federal offenses Trump or his relatives might have committed before May 19—a clause potentially saving the president more than $100 million in unpaid taxes, interest, and penalties.
The Anti-Weaponization Fund drew intense bipartisan backlash, prompting Blanche to abandon the scheme two weeks after its unveiling. Yet he asserted the immunity agreement remained intact. Although Williams’ order does not reverse either provision, it underscores the brazenly corrupt nature of the arrangement, which rested on a fraudulent lawsuit pitting Trump against agencies he exercises oversight over, represented by Justice Department lawyers who themselves answer to him.
Trump’s lawsuit, joined by two of his sons and the Trump Organization, recited a wildly improbable claim that an IRS contractor’s illegal disclosure of their tax returns had caused “at least” $10 billion in damages. The suit, filed more than two years after learning of the leak, surpassed the statute of limitations for the claim Trump invoked.
The statute in question covers unauthorized disclosures by “any officer or employee of the United States.” Therefore, even if the filing had been timely, Trump would have faced the hurdle of arguing that a contractor employed by a consulting firm fell into that category—a point the Justice Department has disputed in similar cases.
Nevertheless, the Justice Department did not challenge Trump’s assertions, a stark departure from its typical approach to such lawsuits. That inaction underscored the overt conflicts of interest created by a case in which both sides were represented by lawyers who worked for Trump. The situation was further complicated by an executive order issued by Trump in February 2025 prohibiting government counsel from adopting positions that conflict with the president’s views.
The proceedings were so unusual that Williams, who oversaw the Southern District of Florida case, questioned whether it reflected a real dispute between opposing parties, as required for the litigation to move forward. Trump withdrew his case two days before the briefing deadline on that issue, and Williams never ruled on it. She did, however, on May 29 order Trump’s lawyers to confront “grievous allegations” about the arrangement, including “charges of collusion” and “the assertion that the dismissal in this case was premised on deception by the Parties.” Williams contemplated the possibility of reopening the case, given that the Court might have been “the victim of a fraud.”
The Monday ruling traces the conclusions to that inquiry. Williams notes that Trump could have brought the lawsuit earlier while he was a private citizen. Instead, he “delayed until he again occupied the White House and appointed his former attorney” (Blanche) and the former attorney of individuals who stood to gain from the ‘Anti-Weaponization Fund’ to influential roles within the DOJ — positions that ultimately shaped the case.
That postponement substantially altered the nature of what appeared to be a legal dispute, Williams observes, because it meant Trump wielded “direct, unassailable control over Defendants.” By the time the suit was filed, he effectively headed the IRS, the Treasury Department, and the attorneys representing them. And as Williams notes, Trump has signaled that he exercises total control over those supposed adversaries.
Under Trump’s February 2025 directive, “no executive-branch employee acting in an official capacity may advance a legal interpretation of the law as the United States’ position that contradicts” the president’s view on any issue of law, including stances taken in court. Williams emphasizes the implications: “In this case, unlike many private-party actions, Defendants and their representatives [were] unable to present any legal position or interpretation—however legitimate or well-reasoned—contrary to the Lead Plaintiff’s position, President Trump.”
Beyond barring the Justice Department from opposing Trump’s legal positions, the directive also declared the executive branch must operate under Presidential supervision and control. The Supreme Court recently echoed that stance in Trump v. Slaughter, upholding the president’s broad authority to dismiss members of the Federal Trade Commission.
“Subordinates who exercise the President’s power are subject to removal by him,” Chief Justice John Roberts wrote in the majority opinion. “Then, and only then, can they remain accountable to the President, and the President to the people… These officers exercise the President’s power, not their own, and thus must be responsible to him.”
That principle implies that all participants in the IRS case, including Treasury Secretary Scott Bessent, IRS chief executive Frank J. Bisignano Jr., Blanche, and other DOJ officials, act as Trump’s proxies serving at his pleasure. “Plaintiffs cannot argue before the Supreme Court that Executive Branch actors ‘unquestionably exercise[] executive power, and must therefore be controlled by the Chief Executive,'” Williams writes, and then contend in this case that “the Parties are sufficiently adverse to establish an actual case or controversy.”
Even without that, Williams notes that the Justice Department’s response to Trump’s lawsuit confirms that both sides were serving his interests. In contrast to how the government has behaved in other cases involving the same statute and the same IRS contractor’s unauthorized disclosure of confidential tax information, she observes, the government’s lawyers did not attempt to defend the agencies they were tasked with representing, protect taxpayers’ money, or even file an appearance.
Instead, “before the Parties’ deadline for addressing the Court’s critical jurisdictional questions passed,” they “executed the ‘settlement agreement’ that effectively mooted the issues the Court identified,” Williams writes. “This case was ‘resolved’ before any litigation began and before the Government was required to articulate its position.”
Given “the brief chronology, the quiet docket, and Defendants’ departure from standard litigation strategies seen in similar cases,” Williams says, “the Court must conclude that Defendants chose not to ‘advance an interpretation of the law as the position of the United States that contravenes’ President Trump’s view of this lawsuit. It is evident that obedience to the mandate of his Executive Order has been fulfilled by Defendants’ actions (or more precisely, their inaction) in this case,” which “demonstrates President Trump’s actual control in this litigation.”
That finding is in line with Trump’s assertion during a 2017 interview with The New York Times that he has an “absolute right to do what I want with the Justice Department.” It also aligns with his portrayal of the legal claims against federal agencies. “I’m suing myself,” he remarked last October when seeking $230 million from the Justice Department for federal investigations during the Biden era. “I’m supposed to work out a settlement with myself,” he told reporters just days after suing the IRS.
“The Parties, most of whom are government actors, did not engage in any public discussion or judicial review regarding their ‘unusual’ arrangement and whether they were legally adverse,” Williams notes. “Indeed, they actively avoided such consideration. And the extraordinary award crafted by the Parties for claims never litigated, and still undefined, on behalf of unnamed third parties whose future remedies bear no relation to the claims in this case, shows that real adverse interests were never presented to the Court.”
Blanche confirmed this point by deciding not to implement the Anti-Weaponization Fund. That decision, “which has not been memorialized or adopted by Plaintiffs or their lawyers, demonstrates his confidence that he could speak for, and bind, both sides of this matter,” Williams writes. “This certainty supports the conclusion that the Parties acted in concert and were never truly opposed. Indeed, ‘a party may not unilaterally repudiate a settlement agreement once it is formed.'”
The remaining provisions of the “settlement” are also legally dubious. One provision “purports to bar the IRS from conducting any future tax audits of President Trump, his sons, and their entities,” Williams notes. She explains that “this provision directly contradicts” 26 USC 7217, which makes it unlawful for an executive-branch official to “request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or any other investigation of a given taxpayer with respect to that taxpayer’s tax liability.”
The “explicit text of this statute” prevents Trump and his attorneys from “asking for or promoting termination of an audit directed toward him,” Williams writes. “And acquiescing to such a demand would be wholly incompatible with the duties of DOJ attorneys (as well as CEO Bisignano for the IRS) to enforce the law and protect the public interest.” Williams adds that “the possibility of millions of dollars in tax relief and related benefits may violate Article II, Section I of the United States Constitution,” which bars a president from receiving additional compensation from the government beyond his official salary.
“Whether executives within the branch can privately agree to grant themselves and their former clients broad immunities and billions in tax funds for legally undefined grievances was never raised before this court,” Williams states. “The issue is whether the parties could do so while claiming to be adverse and seeking the court’s legitimacy. The answer is a decisive ‘no’: The lead plaintiff and the government constitute a single, unified interest.”
A court “should not serve as a forum for a party that cynically treats a lawsuit as a tool to achieve a predetermined outcome,” Williams writes. “Plaintiffs used this action to justify a particular award in this matter—access to taxpayer funds and exemption from audits and other inquiries—which was accomplished by manipulating control over Defendants.” And that, she adds, violated Rule 11 of the Federal Rules of Civil Procedure, which bars filings made for an improper purpose.
On that basis, Williams referred Alejandro Brito, one of Trump’s attorneys, to the Florida Bar for consideration of possible disciplinary actions. She also barred another Trump lawyer, Daniel Z. Epstein, from representing clients in the Southern District of Florida for a year. Additionally, she instructed that the parties to the lawsuit, including Trump, his sons, the Trump Organization, the IRS, and the Treasury Department, are prohibited from referring to the purported ‘settlement agreement,’ or from using, offering, admitting, or citing any of its provisions in any judicial, administrative, regulatory, arbitration, or other official proceeding as evidence of a settlement reached in this matter.
Williams also invoked her “inherent authority” to safeguard the integrity of judicial proceedings. In that vein, she authorized requests for the plaintiffs to reimburse the legal expenses incurred by parties that submitted amicus briefs, including the 35 retired federal judges who had urged her to reopen the case.
“This action was never about a party seeking judicial resolution of a legal issue or a factual dispute,” Williams concludes. “The very nature of the suit and the conduct of the Parties and their counsel from the outset demonstrate that this was an attempt to use the Court to lend legitimacy to an agreement granting immunity to people and entities tied to the President and to earmark billions of dollars in taxpayer funds to address grievances not defined by law.” In short, she states, “the facts before this Court show there was never adverseness between the Parties; there was never a case or controversy; and there was never a determination of who would prevail.”
