A federal judge on Monday nullified an agreement the government reached with Donald Trump and his sons over the leak of his tax returns, lambasting the government and the president's lawyers for using the judicial process to concoct a beneficial arrangement for the president.
Judge Kathleen Williams' Ruling
US district judge Kathleen Williams in the southern district of Florida blocked a widely criticized arrangement reached earlier this year to resolve a $10bn lawsuit by Trump and his sons over the leak of the president's tax returns. The government never responded to the lawsuit and then announced it was settling by creating a $1.8bn slush fund to compensate victims of “government weaponization” and giving the president, his family, and related entities immunity from tax audits.
Amid bipartisan backlash, acting attorney general Todd Blanche announced the justice department was scrapping the fund, but the tax immunity provisions remained in place.
Lawsuit Filed for Improper Purpose
In her ruling, Williams said there had never been a genuine controversy in the case – a requirement for any lawsuit – since Trump controlled the treasury department. She also sanctioned Trump's lawyers for their conduct before the court.
“The nature of the suit itself and the conduct of the parties and counsel from its filing make plain that this was an attempt to use the court to provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the president and to earmark billions of dollars from American taxpayers to redress grievances not defined in the law,” she wrote.
“The court finds that this matter was brought for an improper purpose – to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact,” she added.
Evidence of Bad Faith
In her 56-page ruling, Williams offered evidence for why it was clear the lawsuit was filed in bad faith and the result was collusive. For example, one of Trump's lawyers, Daniel Epstein, never tried to seek permission to appear in the case in the southern district of Florida – something he had done in other cases – which Williams took as a sign he never intended to pursue the case.
She also noted that the justice department had never attempted to answer obvious questions about whether such an agreement ran afoul of the emoluments clause of the constitution or a law blocking the president from ordering or ending an audit of a particular taxpayer. Williams said the fact that the government was able to unilaterally end the slush-fund portion of the agreement suggested the parties were not actually adverse.
Disciplinary Actions and Referrals
Williams referred one of Trump's lawyers, Alejandro Brito, to the Florida bar for potential disciplinary action. She blocked Epstein from appearing on behalf of clients in the southern district of Florida for a year. She also criticized Blanche and associate attorney general Stanley Woodward, close allies of Trump, for their conduct in the case, and referred them to the bars in New York and District of Columbia, where there are ongoing disciplinary proceedings against them.
The plaintiffs, she said, should have known the statute of limitations had run out on their claim and that the amount of money they were seeking was “unsupported by facts or law”.
Impact and Next Steps
Her ruling blocks both Trump, his sons, and business, and the government from “using, offering, admitting, or citing” anything from the so-called settlement agreement in any kind of proceeding. Williams also ordered the parties to pay the legal fees of the retired judges and other third parties who had filed friend of the court briefs.
Blanche is expected to be asked about the settlement when he faces lawmakers on Wednesday in a confirmation hearing to become the permanent attorney general. Critics still want Congress to act to prevent the settlement from ever taking effect.
“The court’s decision is important, but does not remove the need for congressional action to nullify the entire deal and to prevent any similar attempts at presidential self-dealing in the future,” said Brandon DeBot, policy director at the Tax Law Center.
