US Justice Department establishes $1.7 billion fund following IRS lawsuit withdrawal

The US Justice Department announced the establishment of a $1.7 billion "Anti-Weaponization Fund" on Monday, a move that resolves a $10 billion lawsuit filed by the Trump administration against the Internal Revenue Service. The litigation, which centred on allegations regarding the leak of President Donald Trump’s tax returns during his first term in the White House, has been withdrawn as part of the settlement.

Acting Attorney General Todd Blanche described the fund as a "lawful process for victims of lawfare and weaponization to be heard and seek redress." The compensation package is designed to reimburse allies of President Trump who allege they suffered political persecution by the department during the previous administration of Joe Biden.

The resolution has provoked immediate and severe criticism from Democrats and government ethics watchdogs. Critics have characterised the deal as corrupt and an unprecedented misuse of taxpayer money, warning that it would unjustly enrich individuals close to the president and create a precedent for meritless claims of political persecution.

Congressman Jamie Raskin, the top Democrat on the House Judiciary Committee, condemned the arrangement in a statement. He described the case as a "racket" designed to extract $1.7 billion from the Treasury to create a "slush fund" for the president to distribute to supporters, including those involved in the January 6, 2021, Capitol attack.

Details regarding the eligibility criteria for the fund have not been disclosed, leaving uncertainty over how the money will be distributed or which specific entities qualify. While Trump’s attorneys suggested in their court filing that the resolution would not be subject to judicial review, a group of 93 members of Congress has filed a brief challenging the settlement.

The dismissal of the IRS lawsuit follows a pattern of legal shifts within the current administration. The Justice Department recently dropped fraud charges against Adani, a move that occurred shortly after the Indian billionaire’s attorney stated that litigation was preventing the completion of a $10 billion investment pledge.

Former Attorney General Merrick Garland has consistently denied allegations of politicisation, stating that his department’s decisions were based on facts and the law. His administration also investigated President Biden for his handling of classified information and prosecuted Biden’s son, Hunter, on tax and gun charges.

Ethics groups have vowed to continue their opposition to the settlement. Skye Perryman, president and CEO of Democracy Forward, described the lawsuit as a "sham" and a ploy to access taxpayer funds. She confirmed that her organisation would continue to fight the resolution, citing concerns about the department's insulation from presidential control.

The original lawsuit, filed in a Florida federal court, alleged that the leak of confidential tax records caused reputational and financial harm to the president and his family. The case named Donald Trump Jr. and Eric Trump as plaintiffs and followed the sentencing of former IRS contractor Charles Edward Littlejohn, who pleaded guilty to leaking the information to news outlets.