Judge Rules Trump Family’s IRS Lawsuit Was a Bad-Faith Scheme

U.S. District Judge Kathleen Williams, an Obama appointee, ruled Monday that a lawsuit President Trump, his sons Donald Jr. and Eric, and the Trump Organization brought against the IRS was not filed to “vindicate rights” but instead sought to “manipulate the judicial process,” finding the parties had acted in bad faith [1]. The suit had sought damages over the leaking of Trump’s personal tax records by a former IRS contractor more than five years earlier; rather than litigate the case, the Trump family and the Justice Department announced a settlement on May 18, 2026, under which the lawsuit would be dropped in exchange for a government apology and an agreement that the attorney general would establish a $1.776 billion “Anti-Weaponization Fund” [2]. Williams found the settlement was “the product of collusion” between the parties and ordered sanctions against the attorneys involved, referring Trump attorney Alejandro Brito to the Florida Bar for possible discipline [3]. She also directed that a copy of her order be added to ongoing disciplinary proceedings against Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward [4].

Why It Sucks:

Conservatives

• Another Obama judge targeting Trump. Supporters argue an Obama-appointed judge blocking a settlement the DOJ itself agreed to is another example of the judiciary obstructing the president rather than neutrally applying the law [1].
• The fund would have compensated real victims. Backers note the $1.776 billion fund was framed as compensation for people harmed by politically motivated leaks and investigations, and say the ruling denies that accountability [2].
• DOJ lawyers now face punishment for doing their jobs. Conservatives argue attorneys who negotiated a settlement at the direction of their client are now being dragged into bar discipline and referrals, a chilling precedent for government lawyers [3, 4].

Progressives

• A slush fund for allies, exposed. Progressives say the ruling confirms what critics warned in May: the “Anti-Weaponization Fund” was a vehicle to funnel nearly $1.8 billion toward the president’s allies [2].
• The president used his own DOJ as a shield. Watchdog groups point to the judge’s finding of “collusion” as proof the Justice Department negotiated against the public interest rather than defending it [1, 3].
• Accountability finally landed on Trump’s lawyers. Democrats argue the bar referral and sanctions show that attempts to bypass Congress and the courts through backroom settlements carry real consequences [3, 4].

Career DOJ Attorneys

• Line attorneys are caught in the crossfire. Lawyers who carried out a settlement approved by their superiors now face personal referral to state bar authorities, raising questions about who bears responsibility when political leadership directs legal strategy [3].
• The department’s credibility takes another hit. Legal ethics observers note this ruling adds to existing disciplinary proceedings against the department’s own Acting Attorney General and Associate Attorney General, compounding concerns about the agency’s independence [4].
• Future settlements just got harder to negotiate. Government attorneys worry the ruling will make career DOJ lawyers more risk-averse about signing off on politically sensitive settlements, for fear of individual sanction [1, 3].

Sources & Citations:

[1] CNN: Judge — Trump sought to ‘manipulate the judicial process’ with his IRS lawsuit and attempted $1.8B fund
[2] Bloomberg: Judge Rules That Trump’s IRS Immunity Deal Has No ‘Basis in Law’
[3] Forbes: Judge Smacks Down Trump’s IRS Settlement And Orders Sanctions
[4] NBC News: Trump administration tried to ‘manipulate the judicial process’ with its IRS settlement, judge says