Judge reopens Trump IRS settlement probe after 35 former judges cry fraud

The settlement under scrutiny

A federal judge in Miami has ordered an investigation into what former federal judges are calling “fraud on the court”: the Trump administration’s controversial $1.8bn settlement with the Internal Revenue Service that would have created a fund to compensate people who claim they were targeted by federal agencies.

District Court Judge Kathleen Williams issued the order on Friday, reopening a lawsuit that President Trump and his sons brought against the IRS after their tax returns were leaked by a contractor. The case was originally dismissed in May after what appeared to be a settlement, but the terms sparked immediate outrage.

Under the agreement, the Trump family would receive permanent immunity from IRS audits, while the DOJ planned to establish a $1.776bn “anti-weaponization fund” to pay out claimants who say they were victims of politicised prosecution.

35 former judges sound the alarm

Thirty-five retired federal judges, including former US District Judge Nancy Gertner who served 17 years in Massachusetts, filed a motion raising serious concerns about the deal.

Speaking on Democracy Now, Judge Gertner explained: “What happened in this case was, essentially, Trump was suing himself; there was no question that Trump was on both sides of the ‘v.'”

The judges’ attorney, former New Jersey Attorney General Matt Platkin, said: “It is illegal for the president to ask for any IRS audit to be opened or closed. That is a federal crime.”

Their motion argued the settlement was “a product of collusion and itself a fraud on the court”, and that Trump used his lawsuit to obtain “unlawful private benefits” while creating a fund to dole out taxpayer money “without constitutional or congressional authority”.

The Trump administration’s reversal

Last week, Acting Attorney General Todd Blanche (formerly Trump’s personal attorney) told Congress the DOJ would not proceed with the $1.8bn fund, citing bipartisan backlash. “We are not moving forward with the fund, period,” he told Congresswoman Grace Meng.

However, critics pointed out that while the fund may be dropped, the core settlement, granting Trump and his family permanent immunity from IRS scrutiny, remains intact.

Connecticut Congressmember Rosa DeLauro confronted Blanche on this point: “You said, ‘OK, we have had a ton of backlash on this $1.8bn slush fund. However, as part of the settlement, which you’ve said, which is this immunity for the President and his family and his business, that stands.'”

Blanche insisted it was “not immunity” but rather “a promise”, a standard settlement term. DeLauro responded: “It’s immunity.”

What happens next

Judge Williams has given Trump’s attorneys until June 12th to respond to the allegations of collusion. She indicated she may summon DOJ officials, including Blanche, to testify about the settlement’s circumstances.

The judge wrote that she was “empowered to investigate serious misconduct” and wanted to determine “whether the case should be reopened because the court was the ‘victim of a fraud'”.

The case raises fundamental questions about the separation of powers and whether a president can effectively settle a lawsuit with their own government, using the judiciary as what critics call a “fig leaf” to legitimise payments to political allies.

The counter-argument

The Trump administration will argue this was a routine tax settlement and that the president, like any taxpayer, is entitled to resolve disputes with the IRS. They may also note that the $1.8bn fund was ostensibly designed to help ordinary citizens who believe they were targets of overreach, though critics say in practice it would have rewarded January 6th defendants and other Trump supporters.

The administration could further point to the recent reversal as evidence they listened to concerns, even if the underlying settlement remains.