Justice Department announces nearly $1.8B fund to compensate Trump allies in a deal to drop IRS suit

"The machinery of government should never be weaponized against any American, and it is this Department’s intention to make right the wrongs that were previously done while ensuring this never happens again,” Blanche said in a statement that made no mention of how investigations and prosecutions of Trump's political opponents under his watch have exposed the Justice Department to the same claims of politicized law enforcement that he said he opposed.

Blanche is expected to be pressed on the fund when he testifies Tuesday on Capitol Hill about the Justice Department budget.

Nearly 100 Democrats in the House of Representatives signed onto a legal brief urging a judge to block what they described as an unprecedented resolution that they said would unjustly enrich people close to the president with taxpayer dollars and open the door to meritless claims of political persecution.

“This is one of the single most corrupt acts in American history,” Donald Sherman, the president of Citizens for Responsibility and Ethics in Washington, said in a statement.

The fund would represent not only a highly unorthodox resolution but also a further demonstration of the administration’s eagerness to reward allies of Trump who have long insisted that they have been unjustly investigated and in some cases charged and convicted. Most notably, the president on his first day back in office pardoned or commuted the sentences of supporters who rioted at the U.S. Capitol on Jan. 6, 2021. His Justice Department since then has approved payouts to supporters entangled in the Trump-Russia investigation and investigated and prosecuted some of his perceived adversaries.

Trump’s attorneys suggested in their court filing seeking to dismiss the case that the resolution would not be reviewable by a judge. But a group of 93 members of Congress filed a brief teeing up a challenge.

“This case is nothing but a racket designed to take $1.7 billion of taxpayer dollars out of the Treasury and pour it into a huge slush fund for Trump at DOJ to hand out to his private militia of insurrectionists, rioters, and white supremacists, including those who brutally beat police officers on January 6, 2021, and sycophant accomplices to his election stealing schemes,” Rep. Jamie Raskin, the top Democrat on the House Judiciary Committee, said in a statement.

Trump has long raised ‘weaponization’ claims

The Justice Department did not name specific individuals who might stand to benefit from the fund, but said there were no “partisan requirements” for applicants and that anyone who believes they've been unfairly persecuted could seek a payout as well as an apology. A five-member commission appointed by Blanche will oversee the fund.

The creation of the fund is in keeping with Trump’s long-running claims that the Justice Department during the Biden administration was weaponized against him.

He has cited as proof the since-abandoned criminal charges he faced between his first and second terms of conspiring to overturn the results of the 2020 presidential election and of retaining classified documents at his Mar-a-Lago estate in Florida. As a condition for resolving the lawsuit, Trump has agreed to resolve administrative claims in which he sought compensation over the Mar-a-Lago investigation and a separate probe into ties between his 2016 campaign and Russia, an inquiry that unfolded during his first term in office and that he has long railed against.

At the White House on Monday afternoon, Trump was asked if individuals who committed violence on January 6th should receive compensation from the fund. “It’ll all be dependent on a committee,” Trump said, adding, “I didn’t do this deal. It was told to me yesterday.” He said the fund was dedicated to “reimbursing people who were horribly treated.”

Merrick Garland, who served as attorney general during the Biden administration, has repeatedly denied allegations of politicization and has said his decisions followed facts, the evidence and the law. His Justice Department investigated prominent Democrats too, most significantly by appointing a special counsel who scrutinized President Joe Biden for his handling of classified information. Another special counsel brought tax and gun charges against Biden’s son Hunter.

Nonetheless, Trump’s current Justice Department has actively pursued the president’s retribution campaign, bringing criminal charges against some of his political opponents and initiating a wide-ranging investigation that aims to establish a yearslong conspiracy between law enforcement and intelligence officials against Trump.

In defending the deal, the Justice Department pointed to a fund established by the Obama administration to compensate Native American farmers who said they had experienced racial discrimination. But that fund was not created with a goal of benefiting allies of the president who had been previously investigated for potential criminal conduct.

Trump's lawsuit followed the leak of tax returns

Trump alleged in a lawsuit filed in Florida earlier this year that a previous leak of his and the Trump Organization’s confidential tax records caused him reputational harm and unfairly tarnished his business reputation.

The president’s sons Donald Trump Jr. and Eric Trump also joined the suit.

In 2024, former IRS contractor Charles Edward Littlejohn, who worked for Booz Allen Hamilton, a defense and national security tech firm, was sentenced to five years in prison after pleading guilty to leaking tax information about Trump and others to two news outlets between 2018 and 2020.

The outlets were not named in the charging documents, but the description and time frame align with stories about Trump’s tax returns in The New York Times and reporting about wealthy Americans’ taxes in the nonprofit investigative journalism organization ProPublica. The 2020 New York Times report found Trump paid $750 in federal income tax the year he first entered the White House, and no income tax at all some years, thanks to reported colossal losses.

In the first sign that a settlement was coming, lawyers for the president asked a judge last month to pause the case for 90 days while the two sides work to reach a settlement or resolution.

Kathleen Williams, the judge handling the lawsuit, dismissed the case Monday and in her filing admonished the government agencies, notably the Justice Department, for not being transparent about the settlement deal.

She said no agency "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.”

Williams had previously assigned a group of attorneys to determine whether there was a conflict in the case since, as sitting president, Trump was suing “entities whose decisions are subject to his direction.”

The lawyers group wrote the court this month expressing concerns about whether the Justice Department was properly insulated from the president’s control of the case.