President Donald Trump has withdrawn his $10 billion lawsuit against the Internal Revenue Service (IRS), while his administration announced the creation of a $1.77 billion "anti-weaponization" fund to compensate some of his political allies.
Court documents filed Monday in Florida did not disclose the terms of the agreement, including whether any settlement was reached. However, the Department of Justice (DOJ) the same day announced the establishment of a $1.77 billion "Anti-Weaponization Fund" aimed at "providing a systematic process to hear and resolve complaints from others who have also been weaponized and legalized." According to the DOJ, the fund is part of a settlement agreement.
Earlier, ABC News reported that the president was willing to drop the lawsuit in exchange for the creation of a fund to pay Trump allies who were allegedly wrongfully investigated and prosecuted.
The lawsuit stemmed from former IRS contractor Charles Littlejohn leaking Trump's tax returns to media outlets, including The New York Times and ProPublica, in 2019 and 2020. Those returns showed Trump paid very little or no income tax for several years. Littlejohn later pleaded guilty and was sentenced to five years in prison.
While court documents did not mention the terms of the agreement, news of the fund sparked fierce opposition. Rep. Jamie Raskin, D-Md., called the idea "unconstitutional." California Gov. Gavin Newsom criticized the president, saying Trump wants to "use $1.7 billion of our tax dollars to give to the January 6 insurrectionists and his cronies."
It remains unclear who will specifically benefit from the fund. Trump has long accused the DOJ under President Joe Biden of being weaponized against him, while former Attorney General Merrick Garland has denied such politicization.
The DOJ cited legal precedent for the fund, pointing to the "Keepseagle" program under former President Barack Obama's administration, which established a fund to settle allegations of racial discrimination against the federal government.
Government watchdog group Citizens for Responsibility and Ethics in Washington (CREW) said it would investigate the use of the fund. CREW President Donald K. Sherman called it "one of the most brazen acts of corruption in American history."
The president's attorney requested a federal judge stay the case for 90 days to allow the sides to seek a settlement. When asked in February how he would handle compensation for damages, Trump said: "I think we'll do something for charity."
U.S. District Judge Kathleen Williams in Miami, who is overseeing the case, questioned whether the parties were genuinely adversarial and scheduled a hearing for May 27 to review the dismissal.
