U.S. President Donald Trump has denied allegations that he worked with the U.S. Justice Department to create a controversial $1.8 billion compensation fund through what critics describe as a “collusive” lawsuit against the Internal Revenue Service (IRS).
In a court filing submitted on Friday, Trump’s legal team argued that his $10 billion lawsuit against the IRS was legitimate and not an attempt to deceive the court. The lawyers rejected claims made by a group of 35 former federal judges, who alleged that the lawsuit was used as a legal mechanism to establish a fund that could potentially benefit Trump’s political allies and supporters.
According to Trump’s attorneys, the former judges relied on speculation rather than evidence in accusing the president and the Justice Department of manipulating the legal process.
“Based on these bare-bones assertions, they ask the court to wrongly conclude that the entire case was a sham,” the filing stated, insisting there was no proof of collusion or fraud.
The dispute is now before U.S. District Judge Kathleen Williams in Miami, who is considering whether to reopen the case and investigate claims that Trump and government officials misled the court during settlement negotiations.
The controversy stems from Trump’s lawsuit filed in January over the unauthorized release of his tax returns to the media in 2019 by an IRS contractor. Although the contractor later pleaded guilty and served a prison sentence, the Justice Department had maintained that the IRS itself was not legally responsible for the contractor’s actions.
The former judges argued that because Trump effectively controlled both sides of the dispute — as plaintiff and as head of the federal government — there was no genuine legal conflict for the court to resolve. They claimed the lawsuit was merely a vehicle to create the multibillion-dollar fund.
Trump’s legal team dismissed those arguments, contending that the Justice Department routinely settles claims, including some that never reach full litigation. They also argued that Judge Williams does not have broad authority to review or approve every settlement reached between private parties and the government.
If the judge decides to reopen the matter, several key figures involved in the settlement process, including Trump’s lawyers, aides and Justice Department officials, could be required to testify publicly. The court could also impose significant financial or professional sanctions if wrongdoing is established.
The controversy intensified earlier this month when Acting Attorney General Todd Blanche informed Congress that the government would no longer proceed with the proposed fund. The decision followed bipartisan criticism, with lawmakers expressing concerns that the money could be distributed to Trump’s supporters, including individuals involved in the January 6, 2021 attack on the U.S. Capitol.
Despite the withdrawal of the fund proposal, one aspect of the settlement remains in place: Trump will retain immunity from future investigations related to his past tax filings.
Meanwhile, separate lawsuits challenging the legality of the settlement are continuing. A federal judge in Virginia has already issued an order preventing officials from taking further action regarding the proposed fund while legal proceedings remain ongoing.
Lawyers representing the former judges are expected to file their response to Trump’s latest arguments by June 19 as the legal battle over the settlement continues.
