MIAMI – Todd Blanche, the country’s acting attorney general, will face a bar association disciplinary inquiry after a federal judge ruled Monday that the Trump administration had tried to use a civil lawsuit to manufacture presidential immunity from the Internal Revenue Service and manipulate the judicial process to do it.
U.S. District Judge Kathleen Williams, an Obama appointee sitting in the Southern District of Florida, found that the lawsuit Trump filed against the IRS and the Treasury Department was brought in “bad faith” for an “improper purpose.” The ruling rejected a settlement the administration had arranged and publicly celebrated, a deal that would have established an “anti-weaponization fund” and granted Trump and his family immunity from future IRS audits and investigations.
“The lawsuit was not brought to vindicate rights but to manipulate the judicial process,” Williams wrote in her ruling, as reported by NBC News. She found there was never a genuine adversarial relationship between the parties, a requirement for any valid federal court proceeding, and concluded the $1.776 billion fund amount “speaks of a ‘branding’ effort rather than deliberate calculation.”
The underlying lawsuit alleged a former IRS contractor had illegally disclosed Trump’s tax returns to news outlets. Trump sought $10 billion in damages and filed the case in the Southern District of Florida. The case was still active when his administration, two days before mandatory filings were due, voluntarily withdrew the complaint and announced a settlement. That settlement established the $1.776 billion anti-weaponization fund and, in the deal’s most consequential term, granted Trump and members of his family immunity from future IRS audits and investigations. It is that settlement, and the manner in which it was reached, that Williams voided on Monday.
Four lawyers involved in the arrangement face professional consequences under the ruling. Blanche, acting as attorney general, and Stanley Woodward, the associate attorney general, were both referred to bar associations in New York and Washington for disciplinary proceedings. Attorney Alejandro Brito was referred to the Florida Bar. Daniel Z. Epstein, the fourth attorney subject to sanction, was barred for one year from appearing in any case in the Southern District of Florida.
The immediate professional effect of a bar referral is limited. Bar associations conduct independent proceedings that may result in reprimand, suspension, disbarment, or no action at all. Neither the New York nor Washington bar has announced what it intends to do with the Williams referral. Blanche has not resigned. No bar referral automatically removes a federal official from office, and no timeline for the disciplinary inquiry has been set. What a bar referral does accomplish, in this case, is attach a federal judge’s formal finding of professional misconduct to Blanche’s record.
The “anti-weaponization fund” at the center of the settlement was not, in Williams’ analysis, a neutral legal instrument. Its name was a political term, chosen to signal the administration’s framing of the IRS as an instrument of partisan targeting. Its dollar amount, $1.776 billion, did not emerge from any legal calculation of damages or appropriate remedy. Williams treated both choices as evidence of what the settlement was actually for: not compensation, but a presidential brand extension executed through a federal court proceeding.
The ruling arrives as courts have repeatedly found the Trump administration using legal instruments for purposes courts have deemed improper or beyond executive authority. A federal judge in Boston earlier this year blocked an executive order conditioning mail ballot delivery on enrollment in a federal voter registry, ruling that the Constitution gives presidents no control over state elections. That ruling, like the one issued Monday, found a Trump administration action exceeded what the law allows. Monday’s case goes further: Williams found the administration did not merely exceed its legal authority but acted in bad faith while doing so.
Democrats in Congress have argued that the same pattern of self-dealing visible in the IRS settlement is present throughout the administration’s financial conduct. The stalled CLARITY Act ethics negotiations have centered on Democratic demands that senior officials be barred from holding cryptocurrency while in office, a provision inspired directly by Trump’s $636 million memecoin income. The IRS ruling adds to that record a federal court’s judgment that the administration arranged a settlement specifically designed to shield Trump’s finances from government scrutiny.
The administration has not said whether it will appeal Williams’ ruling or refile the original lawsuit. The $10 billion damages claim, which the administration voluntarily withdrew to reach the settlement, remains unresolved if the settlement is voided. The anti-weaponization fund, whose legal existence depended on the settlement Williams rejected, has no clear standing. Neither the IRS nor the Treasury has commented on what the ruling means for their relationship to the White House’s finances going forward.
Judge Williams’ central finding was not technical. A lawsuit brought in bad faith and for an improper purpose is, in federal courts, a serious charge. What she concluded was simpler than any procedural claim: the Trump administration used a federal court to construct something Congress had not granted and the Constitution does not provide, namely a sitting president’s permanent exemption from the agency that audits taxpayers for a living. Whether the bar associations act on her referrals will be known eventually. Whether any future settlement restores what Monday’s ruling took away is a question the administration has not answered.
