35 Former Federal Judges Call Trump’s Self-Settlement A Fraud On The Court

Legal Issues

from the at-least-someone-is-doing-something dept

Thirty-five (thirty-five!) former federal judges are asking a current federal judge to reopen the case where Donald Trump sued his own IRS, and then “settled” the case on terms extremely favorable to himself, his family, and his MAGA loyalists.

Law schools are famous for coming up with “hypotheticals” to try to test students’ knowledge of the law. Sometimes the hypos are fun. Sometimes they’re just bizarre. But the reality of the Trump world now throws out things crazier than law school hypos every few days. As you’ll recall, earlier this year, sitting President Donald Trump sued his own IRS because during his own first administration, a contractor had leaked hundreds of thousands of tax returns, including Trump’s. As we keep pointing out, every single President since Nixon has regularly released their tax returns as a sign of transparency to the American public… except Trump. Who has promised to release his tax returns for a decade now and then not done so, often claiming he couldn’t because he was being audited (leaving aside that when Nixon started this practice, he was being audited).

Of course, the real reason that Trump probably didn’t release his tax returns was because (as we found out thanks to the leak) his actual tax returns showed evidence of pretty significant tax fraud to the tune of $100 million.

Either way, the Biden administration (not Trump) prosecuted the guy who leaked the tax returns and that guy, Charles Littlejohn, is sitting in prison as part of his sentence. But Trump still sued his own IRS and demanded an astounding $10 billion, which would be significantly more than Trump is worth all combined, even with his net worth going up by by over $2 billion since becoming president this time around.

Last month, the judge in the case suddenly called for a timeout, noting that she was unsure that she could actually hear the case, given the fact that it appeared both sides were one and the same, meaning there could be no cause or controversy. She had asked the “parties” (again, effectively one and the same) to brief the court on whether or not the case could even continue. Desperate to end the case before such filings were due, the parties (Donald Trump and Donald Trump’s DOJ) “settled” the case, setting up an unlawful and unconstitutional $1.776 billion fund for MAGA loyalists who claimed Biden wronged them, as well as ending and forever preventing IRS audits of the entire Trump family and family businesses for any transactions up until now.

This is a massive windfall for the president (and I’ve seen some people suggest that perhaps he should face a tax bill for both, since they are positioned as part of a settlement on his behalf) that shouldn’t be allowed without serious judicial scrutiny to make sure that the president is not engaged in the sort of self-dealing he is pretty obviously engaged in.

But the judge in the case did close the case, noting that the voluntary dismissal gave her little choice:

Because the dismissal with prejudice extinguishes the claims regarding the unlawful disclosure of Plaintiffs’ tax returns, the Court cancels all deadlines, including the date that the Parties were required to submit briefing as to whether an actual case or controversy existed in this matter.

The judge does note that the court has no way of knowing whether or not the “settlement” is reasonable given the circumstances:

Because the Notice does not reference any settlement or include a stipulation of settlement, there is no settlement of record. Additionally, Defendants—federal agencies represented by the Department of Justice, which has an independent obligation to uphold the “public’s strong interest in knowing about the conduct of its Government and expenditure of its resources” and the “fair administration of justice,” 28 C.F.R. §§ 50.9, 50.23—neither submitted any settlement documents nor filed any documents ensuring hat settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed.

Perhaps I’m cynical, but there’s a detectable whiff of snark in that order.

Either way, dozens of former federal judges are now asking Judge Kathleen Williams to reopen the case. They argue the fake “settlement” and dismissal prevented us from ever finding out if the original case could have been heard in the first place. Furthermore, they point out that because the DOJ and Trump have publicly discussed the “settlement” the court should have some jurisdiction over whether or not it was legitimate, even if it wasn’t filed with the court:

On May 18, 2026, this Court dismissed this action with prejudice (ECF No. 62) in response to Plaintiffs’Notice of Voluntary Dismissal with Prejudice (the “Notice,” ECF No. 52), filed earlier that day. The Court expressly noted in its Order dismissing the case that “the Notice does not reference any settlement or include a stipulation of settlement,” and thus “there is no settlement of record.” The Court further noted that Defendants “neither submitted any settlement documents nor filed any documents ensuring that settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed.

The Court was deceived. Despite Plaintiffs not having mentioned any settlement in their Notice, the Department of Justice (“DOJ”) publicly announced a “settlement” of this action shortly after Plaintiffs filed their dismissal. That “settlement” commandeers the contrived sum of $1.776 billion from the United States Treasury, to be handed out to recipients chosen by a commission effectively controlled by the President. 3 The DOJ is calling this the “Anti-Weaponization Fund.” The day after the “settlement” containing the Anti-Weaponization Fund was announced, the DOJ announced that it had subsequently agreed to release “any and all claims . . . whether presently known or unknown, that—as of the Effective Date of the Settlement Agreement—have been or could have been asserted by [the United States] against any of the Plaintiffs or related or affiliated individuals . . . or parties . . . by reason of, with respect to, in connection with, or which arise out of . . . any matters currently pending or that could be pending . . . before Defendants or other agencies or departments.”4 The plain language of this extremely broad provision sweeps in Internal Revenue Service (“IRS”) audits of Plaintiffs’ tax returns and all other claims the United States might have against Plaintiffs—extraordinary benefits for which no consideration was provided to the government.

They further note just how blatant the Trump DOJ has been in tying these “settlements” to the present case, despite not telling the court about any such settlement agreement:

The parties to this case are using this lawsuit as the legal justification for these actions. This is not speculation; the parties themselves have proclaimed it, repeatedly. For starters, the DOJ implemented all of the actions described above via a document expressly titled “Settlement Agreement,” captioned with this case’s caption, plus a three-paragraph addendum that references that “Settlement Agreement” in its first paragraph and in its third paragraph purports to “forever bar[] and preclude[]” the United States from pursuing claims that could have been asserted “by Defendants against any of the Plaintiffs” in this case. The “Settlement Agreement” was signed by Associate Attorney General Stanley Woodward the same day Plaintiffs filed their Notice; in fact, Plaintiffs’ filing of the Notice was expressly required by the “Settlement Agreement.” The addendum granting the extraordinarily broad releases to the President and his family and businesses was signed by Acting Attorney General Todd Blanche the next day, May 19. Yet none of the parties filed either of these documents with the Court. In addition, shortly after announcing the “settlement,” the Acting Attorney General issued an order creating the “Anti-Weaponization Fund.” That order—which references the “Settlement Agreement” in this case—explicitly identifies the Judgment Fund statute, 31 U.S.C. § 1304, under which Congress has authorized appropriations for payments of settlements against the United States, and 28 U.S.C. § 2414, which authorizes payments of “final” judgments against the United States including compromise settlements and “imminent” claims, as the statutory bases for the creation of the Anti-Weaponization Fund. Payments purportedly made pursuant to these statutes in the absence of a genuine case or controversy are not authorized.

That last bit is particularly interesting. The entire trick that the Trump administration is trying to pull here to route this around congressional “power of the purse” approval is by taking it from the Judgment Fund, which is used to pay off any judicial monetary awards against the US government. But here, there is no judicial award. The Trump/Blanche DOJ is trying to pull a fast one on everyone by announcing a settlement, but avoiding telling the court about it, other than to say that the case is dismissed. And then just announcing a separate settlement, while pretending that this out of court (and not reviewed or approved of by any court) satisfies the rules for access to the Judgment Fund.

That’s just stealing from the American taxpayer.

And thus, these former federal judges argue, the court should be asked to review the settlement.

Movants submit that this “settlement” is a product of collusion and is itself a fraud on the Court. But the Court need not decide that ultimate issue now. At this juncture, Movants request only that the Court exercise its powers under Rule 60 to set aside its order ending the case based upon Plaintiffs’ voluntary dismissal. That will allow the Court to commence an inquiry into whether the Court was deceived, including with respect to the existence of an underlying case or controversy and any purported arms-length negotiations undertaken to resolve it. As set forth below, this Court has the power under Rule 60 to determine whether there has been a “corruption of the judicial process itself,” 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2870 (3d ed.), and may set aside a judgment and reopen a case under Rule 60(d)(3), as well as other subsections of Rule 60, whether by this motion or sua sponte. Doing so will allow judicial review of the extraordinary—and historically unprecedented—circumstances presented by this litigation and by the collusive “settlement” that invokes this litigation as the legal justification for its terms.

The rest of the filing makes a fairly compelling (these are former federal judges, after all) argument for (1) why the court has jurisdiction to review the settlement, and (2) why these judges as non-parties to the case can move to have the case re-opened to allow the judge to review the terms of the settlement, especially when there’s evidence that a fraud has been perpetrated on the court.

Even if the Court declines to entertain a non-party motion under Rule 60, it has the authority to issue sua sponte relief where, as here, the parties have effectuated a fraud upon the Court. Rule 60(d) specifically states that it does not “limit a court’s power to . . . set aside a judgment for fraud on the court,” Fed. R. Civ. P. 60(d)(3), and the Supreme Court has long recognized that courts have certain inherent powers that cannot be displaced by statute or the Rules of Civil Procedure. See, e.g., Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). These inherent powers flow from “the nature of [the] institution” and “cannot be dispensed with . . . because they are necessary to the exercise of all others[.]” United States v. Hudson, 7 Cranch 32, 34 (1812). The court’s inherent powers include, as relevant here, the power to vacate a judgment upon proof that it was procured by fraud, Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 245 (1944), or conduct an investigation to determine whether a fraud upon the court has been committed, Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 580 (1946) (“The inherent power of a federal court to investigate whether a judgment was obtained by fraud, is beyond question.”). Thus, the Court has the authority to sua sponte invalidate the voluntary dismissal.

They also point out that simply by reopening the case, the court could stall the ridiculous and corrupt anti-weaponization fund, since the Judgment Fund is only available for final settlements. And if the case is still open the settlement is no longer final.

Should the Court exercise its authority to reopen the case and hold additional proceedings, it would effectively preserve the status quo. Importantly, the Judgment Fund is only available for “final” settlements. 31 C.F.R. § 256.1(a)(1). A settlement premised on a dismissal that has been voided is not “final.” Similarly, voiding the Notice and reopening the case would allow the Court to continue its jurisdictional inquiry. And, if the Court ultimately concludes that it did not have jurisdiction and dismissed the case on those grounds, such a dismissal would deprive the parties of their claimed justification for the settlement.

The former judges don’t mince words about how ridiculous this whole damn thing is:

To be clear, the parties’ settlement was not, and never will be, legally justified. That is because the Acting Attorney General’s Order creating the Anti-Weaponization Fund identified the Judgment Fund, 31 U.S.C. § 1304, and the Attorney General’s authority to enter “compromise settlements” under 28 U.S.C. § 2414, as the basis for the creation of the Anti-Weaponization Fund. Both of those authorities require the existence of a legitimate litigation and not, as here, one that is collusive, feigned, or fraudulent.

The DOJ is only allowed to enter “compromise settlements of claims”—such as this one— “for defense of imminent litigation or suits against the United States, or against its agencies or officials upon obligations or liabilities of the United States.” 28 U.S.C. § 2414. And a feigned or collusive suit is not active or “imminent” litigation against the United States pursuant to which the DOJ is authorized to access the Judgment Fund and § 2414. See U.S. Gov’t Accountability Off., GAO-08-978SP, 3 Principles of Federal Appropriations Law 14-35 (3d ed. 2008) (requiring that “[t]he agency must be confronted with a genuine disagreement or impasse” and “[t]here must be a legitimate dispute over either liability or amount”); 31 C.F.R. § 256.1(b) (“Fiscal Service requires that requests for payment identify the statute that forms the basis of the underlying claim. The award or settlement must comply with the statutory and regulatory requirements that authorize the award or settlement.”).

None of this means Judge Williams will reopen the case. But she was already suspicious, she was already asking questions the parties clearly didn’t want answered, and she’s now been handed a formal legal basis to pick this apart. The former judges aren’t asking her to do something radical — they’re asking her to finish what she already started before the parties ran away from her courtroom.

Whether she does it or not, the filing itself is useful: 35 former federal judges have now put on the record, in plain language, that a sitting president sued himself, settled with himself, hid the settlement from the court, erased his own tax liability, and raided the Treasury for $1.776 billion in the process.

Filed Under: anti-weaponization fund, audits, corruption, donald trump, irs, judgment fund, kathleen williams, taxes, todd blanche