Trump’s $1.8B Slush Fund Hit By Bombshell Leak

A startling leak reveals that the Justice Department was advised to drop Donald Trump’s lawsuit against the IRS even before reaching a settlement with the president by creating a $1.8 billion fund for his supporters.

The New York Times, citing two people with access to an internal memo from IRS lawyers, reports that they planned to challenge Trump’s $10 billion lawsuit against the agency and advised the Justice Department to take action to have it dismissed.

This 25-page memo, which outlined what the lawyers considered flaws in the president’s lawsuit, was submitted to Treasury officials in April. However, according to the two sources, it is unclear whether it was passed on to the relevant parties within the Justice Department.

The Justice Department offered no defense, failing to appear in court to address Trump’s claims that the IRS had not taken the necessary steps to prevent the leak of his tax returns during his first term.

Instead, the agency—led by Acting Attorney General Todd Blanch—reached an unprecedented settlement with Trump, creating a $1.776 billion “Arms Control Fund” in exchange for the president dropping his lawsuit.

This agreement came after a judge questioned the legality of a lawsuit filed by a sitting president against the Internal Revenue Service (IRS), the agency he himself heads.

The revelation that the Justice Department reached an out-of-court settlement, despite having legal defenses in place, risks fueling accusations that the arrangement constitutes an illicit gift of taxpayer money to the president’s allies.

When contacted for comment, the Justice Department declined to say whether it had received the IRS lawyer’s memo or why it had decided to settle.

The department referred The Daily Beast to its press release announcing the creation of the fund, in which Blanch stated: “The machinery of government should never be used as a weapon against any American citizen, and this department intends to correct the mistakes of the past and ensure that they are never repeated.”

The Internal Revenue Service (IRS) and the Treasury Department did not immediately respond to our request for comment.

This massive compensation fund is intended to compensate individuals who claim they were unfairly targeted by the Justice Department under the Biden administration. It could include some 1,600 people charged in connection with the January 6, 2021, attack on the Capitol, including those who assaulted Capitol Police.

Blanche, Trump’s former personal lawyer, will appoint a five-member committee to oversee the taxpayer-funded compensation fund. Trump has the power to remove any member without providing a reason.

Under the agreement, the identities of the fund’s beneficiaries and the amounts of the compensation will remain anonymous.

IRS lawyers followed standard procedures in drafting the brief, unlike those at the Justice Department, who were unsure whether they could challenge Trump’s lawsuit. As head of the executive branch, Trump directed government lawyers to adhere to his interpretation of the law, according to The New York Times.

In their brief, the IRS lawyers identified several problems with Trump’s lawsuit, problems they argued the Justice Department should raise in court. Among these issues was the allegation that the lawsuit was filed after the two-year statute of limitations for suing the IRS for unauthorized disclosure of tax returns had expired.

The brief also advised the Justice Department to challenge the IRS’s liability in the initial leak of Trump’s tax returns.

The billionaire president’s tax information was leaked by an IRS contractor, Charles Littlejohn, who was then working for the consulting firm Booz Allen Hamilton. He was sentenced to five years in prison in 2024 after pleading guilty to leaking tax documents.