{"id":18076,"date":"2026-07-14T12:19:01","date_gmt":"2026-07-14T19:19:01","guid":{"rendered":"https:\/\/bradblog.com\/?p=18076"},"modified":"2026-07-14T13:22:22","modified_gmt":"2026-07-14T20:22:22","slug":"court-finds-bad-faith-in-trumps-untenable-collusive-lawsuit-settlement-agreement-with-irs","status":"publish","type":"post","link":"https:\/\/bradblog.com\/?p=18076","title":{"rendered":"Court Finds ‘Bad Faith’ in Trump’s ‘Untenable’, ‘Collusive’ Lawsuit, ‘Settlement Agreement’ with IRS"},"content":{"rendered":"

<\/center><\/p>\n

In the wake of U.S. District Court Judge Kathleen M. Williams’ May 29 order to reopen Trump v. Internal Revenue Service<\/i>, we detailed<\/a> the following questions: “Did President Trump and and others engage in a conspiracy to defraud the United States in the lawsuit he filed against his own government?” Did they, as urged in a motion filed by 35 retired federal judges, \u201cperpetrate a fraud on the judicial machinery itself\u201d?<\/p>\n

On Monday, in a scathing, 56-page decision<\/a>, Judge Williams answered in the affirmative.<\/p>\n

In a Complaint<\/a> filed on Jan. 29, 2026 by President Trump, sons Eric and Don Jr. and the Trump Organization, Plaintiffs sought an award for themselves of $10 billion<\/i> from the IRS as a result of the decision by Charles Littlejohn, an independent Booz-Allen contractor, to disclose Donald Trump’s tax returns to The New York Times<\/i> along with thousands of other returns of wealthy filers.<\/p>\n

Plaintiffs relied upon 26 U.S.C. \u00a7 7431<\/a>, which authorizes only $1,000<\/i> for each unauthorized disclosure. That same federal law contains a two-year statute of limitations that runs from the date of discovery of the unauthorized disclosure.<\/p>\n

Trump acquired knowledge of the unauthorized disclosure more than two years prior to the filing of the complaint. On Oct. 23, 2023, Littlejohn entered a formal guilty plea to his own criminal prosecution. He did so in the presence of attorney Alina Habba, who announced her appearance on behalf of Donald Trump at the Oct. 23 court hearing in which the plea was proffered. Clearly, Team Trump was aware of all of this more than two years prior to bringing their own suit.<\/p>\n

In that lawsuit — with all of the above mentioned infirmities and more — the Plaintiffs in Trump v. IRS<\/i> filed a Notice of Voluntary Dismissal with Prejudice on May 18, 2026. Neither Plaintiffs, nor the Department of Justice (DOJ) filed a “settlement agreement” with the court. The Notice did not so much as mention the existence of a “settlement agreement”. <\/p>\n

Upon receipt of the Notice, Judge Williams performed a pro forma function by issuing an order to dismiss the case with prejudice. At that moment, the Court had no reason to know that the Notice of Dismissal was part of a fraudulent scheme to acquire access to the Judgment Fund maintained by the Treasury Department. That is why the 35 retired federal judges described it as “a fraud on the judicial machinery itself.”<\/p>\n

The supposed “settlement agreement” — concocted outside the bounds of the court case itself — was then published on the DOJ website on May 18, purporting to create a $1.776 billion “Anti-Weaponization Fund” financed by the Treasury Department’s Settlement Fund, a pool of money, funded by Congressional statute, to compensate victims of governmental overreach. In this case the funds would ostensibly be used to pay off convicted but later pardoned J-6 insurrectionists and other so-called “victims” of supposed governmental “weaponization”, like Walt Nauta, an indicted co-defendant of Trump’s in the case brought against him for stealing national security documents upon leaving office at the end of his first term.<\/p>\n

On the same day the “settlement agreement” was posted by the DOJ, Judge Williams noted in her decision on Monday, “it was reported that IRS officials had prepared a 25-page memorandum that outlined defenses that could have been advanced by the Defendants” to challenge the Trump lawsuit.<\/p>\n

The following day, on May 19, Trump’s former criminal defense attorney now serving as Acting AG Todd Blanche signed an “Addendum” to the “settlement agreement”, purporting to prevent the IRS from ever auditing or investigating the President, his family or his business organization with respect to their tax filings. <\/p>\n

In her order this week, Judge Williams laid out the gravity of the issue before her…<\/p>\n

Lead Plaintiff and Defendants are public servants — the pinnacle of the Executive Branch — sworn to uphold the law, faithfully perform the duties of their office, and protect the American public. The issue before the Court is whether, instead, they ignored ethical norms, court rules and legal authority to manipulate the judicial process. The issue is whether they did so to gild their efforts to gain unprecedented access to the public fisc with a patina of legitimacy.<\/div>\n

In addition to confirming that was precisely what occurred, the court ended the efficacy of the “settlement agreement” and addendum by ruling they could not so much as be referenced by Trump and his minions in future proceedings. Judge Williams also exposed the illegality<\/i> of the attempt to immunize the President, his family and company from future IRS investigations and audits.<\/p>\n

Absence of adversity<\/b><\/p>\n

Under Article III of the U.S. Constitution, federal courts can only decide actual “cases or controversies” in which the interest of the parties are adverse<\/a>. Adversity does not exist where one party — here the President — acts as the “‘dominus litis<\/i>‘ — the ‘master’ or owner of both sides of the litigation.”<\/p>\n

Citing the U.S. Constitution, statutes, Trump’s own Executive Orders and the Supreme Court’s recent decision in Trump v. Slaughter<\/i><\/a>, which held that federal “officers exercise the President’s<\/i> power, not their own, and thus must be responsible to him,” Judge Williams concluded that President Trump controlled both sides of the litigation.<\/p>\n

Article II requires the President control executive power — especially authority wielded by agency heads, who are “the most important” of the President’s subordinates and who “must be the President’s alter egos in their agencies.” [Citation]…President Trump’s supervisory authority directly implicates two key individuals acting on behalf of Defendants: Scott Bessent, the Secretary of the Treasury Department and Acting Commissioner of the IRS, and Frank J. Bisignano, the Chief Executive Officer of the IRS. Plaintiffs cannot argue before the Supreme Court that Executive Branch actors “unquestionably exercise executive power, and must therefore be controlled by the Chief Executive,” in Slaughter<\/i>, and then here, argue that the Parties are sufficiently adverse to establish a case or controversy.<\/div>\n

Plaintiffs’ counsel responded, in part, to the motion by the 35 former judges by claiming that Trump was only suing in his individual capacity as a private citizen at the time his tax returns were disclosed. The judge made short work of that argument, finding: “After review of the record, the Court declines to adopt or accept the credulous exercise of divorcing President Trump’s job title from what’s happened here.”<\/p>\n

Bad faith abdication of DOJ responsibilities<\/b><\/p>\n

Judge Williams observed:<\/p>\n

It is telling that the DOJ, which is tasked with enforcement of United States law, has remained conspicuously absent and silent when serious questions about this matter have been raised\u2026 . In abdicating its responsibility to zealously defend the interests of the United States, the Government entered into a \u2018settlement\u2019 that deviated from its litigation posture in similar actions, disregarded DOJ policies, and accomplished objectives beyond those authorized, as well as those specifically prohibited by law. Under these circumstances, the Court may reasonably infer that the Government failed to defend this lawsuit or to respond to the Court\u2019s jurisdictional inquiry because its position would not withstand judicial scrutiny and because resolution of the threshold issues identified by the Court would not have favored its preferred outcome to this case.<\/div>\n

In support of her determination that bad faith and absence of adversity governed the DOJ’s role in the matter, Judge Williams noted that, in every case arising out of the Littlejohn disclosures before this one, “the DOJ zealously defended the government by challenging the timeliness of the plaintiffs\u2019 claims\u2026and denying that the government could be held liable because the disclosures were made by [an independent contractor].”<\/p>\n

Yet here, the court noted, the DOJ “remained conspicuously absent and silent” even after “serious questions about this matter” were raised by the 35 judges’ motion. The “Addendum,” offering immunity against tax charges signed only by Acting AG Blanche, “contravenes” 28 U.S.C. \u00a77217<\/a>, which prohibits executive branch requests that the IRS terminate an audit or investigation.<\/p>\n

The court added: “Acquiescing to such a demand is wholly incompatible with the duties of DOJ attorneys as well as [IRS] CEO Bisignano.”<\/p>\n

The Court is extremely troubled by the [Congressional] testimony given by Acting Attorney General Blanche on May 19, 2026. In response to why the “settlement agreement” had not been submitted to this Court for review, he stated that “there is no judge” because the case had been dismissed and, therefore, there was “no mechanism” for reviewing the agreement.” [Citation].
\nWhile temporally accurate, this answer is, at best, misleading and, at worst, disingenuous. The Court was available to review any pleading\u2026If [Blanche] had thought the [initial] dismissal [of this case] was improvident\u2026he only had to file an appearance and ask for relief.<\/div>\n

Attorney conflicts of interest and disciplinary referrals<\/b><\/p>\n

The conflict of interest between Blanche’s fealty to his “former” criminal defense client, Donald Trump, and his sworn duty to defend the Constitution and faithfully discharge the duties of the Acting AG are rather obvious. Based upon the record before her, Judge Williams referred Blanche to the New York State Bar with an eye towards disciplinary proceedings. (There can be no doubt that Blanche’s transgressions will also become an issue during his pending confirmation proceedings this week.)<\/p>\n

Daniel Epstein, who signed the “settlement agreement” on behalf of Plaintiffs, previously served as Senior White House Counsel and Special Assistant to the President during the first Trump Administration. The court surmised that Epstein did not make a formal appearance in this case because he “was aware he would never need to appear and litigate the merits.” The court sanctioned attorney Epstein by barring him from appearing in any<\/em> case filed in U.S. District Court (SD FL) for one year.<\/p>\n

The “settlement agreement” was signed on behalf of the Defendants (the IRS and Treasury Department) by Asst. AG Stanley Woodward, Jr. Before he went to DOJ, Woodward represented several of the individuals charged in connection with the J-6 insurrection. He also represented Walt Nauta in the classified documents case. Judge Williams cited a FL State Bar Rule: “A [government] lawyer should not be in a position where benefit to the other client might affect performance of the lawyer’s professional function on behalf of the government.”<\/p>\n

In reasoning that applies to both Woodward and Blanche, who defended Trump in several criminal cases prior to his reelection, Judge Williams observed:<\/p>\n

Instead of either recusing because of their previous representations or vigorously defending this lawsuit as required to do so by DOJ policies and procedures, these lawyers agreed to a \u201csettlement\u201d involving a staggering amount of money potentially benefiting former clients.<\/div>\n

In addition to the referral of Blanche to the New York State Bar, Judge Williams referred Woodward and Plaintiffs’ attorney of record, Alejandro Brito, to the FL State Bar for determinations as to whether disciplinary action is appropriate.<\/p>\n

* * *<\/strong><\/center>Ernest A. Canning is a retired attorney, author, and Vietnam Veteran (4th Infantry, Central Highlands 1968). He previously served as a Senior Advisor to Veterans For Bernie<\/a>.<\/span> Canning has been a member of the California state bar since 1977. In addition to a juris doctor, he has received both undergraduate and graduate degrees in political science. Follow him on Twitter<\/a> and Bluesky<\/a><\/i>.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the wake of U.S. District Court Judge Kathleen M. Williams’ May 29 order to reopen Trump v. Internal Revenue Service, we detailed the following questions: “Did President Trump and and others engage in a conspiracy to defraud the United States in the lawsuit he filed against his own government?” Did they, as urged in […]<\/p>\n","protected":false},"author":107,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"footnotes":""},"categories":[192,2165,223,1199,479,1007,1183,613,2143,2088,1224],"tags":[],"coauthors":[2128],"class_list":["post-18076","post","type-post","status-publish","format-standard","hentry","category-accountability","category-charles-littlejohn","category-dept-of-justice","category-dept-of-treasury","category-donald-trump","category-donald-trump-jr","category-eric-trump","category-irs","category-stanley-woodward","category-todd-blanche","category-trump-organization","bb-type-bradblog"],"acf":[],"_links":{"self":[{"href":"https:\/\/bradblog.com\/index.php?rest_route=\/wp\/v2\/posts\/18076","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bradblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bradblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bradblog.com\/index.php?rest_route=\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/bradblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18076"}],"version-history":[{"count":6,"href":"https:\/\/bradblog.com\/index.php?rest_route=\/wp\/v2\/posts\/18076\/revisions"}],"predecessor-version":[{"id":18106,"href":"https:\/\/bradblog.com\/index.php?rest_route=\/wp\/v2\/posts\/18076\/revisions\/18106"}],"wp:attachment":[{"href":"https:\/\/bradblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18076"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bradblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18076"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bradblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18076"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/bradblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcoauthors&post=18076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}