President Donald Trump's legal team is facing mounting pressure from nearly three dozen former federal judges who are urging a U.S. District Court to investigate what they describe as an "obviously collusive" lawsuit that resulted in a $1.776 billion settlement and the creation of a fund critics have dubbed a "slush fund."
Background
The controversy stems from a lawsuit Trump filed against the IRS in January 2026 in the Southern District of Florida. The suit, which targeted what Trump's legal team called an "anti-weaponization fund," was ostensibly designed to challenge alleged government targeting of conservative taxpayers.
By mid-May, rather than pursuing litigation, Trump's legal team reached a settlement that would establish a $1.776 billion fund rewarding Trump supporters and others allegedly subjected to government scrutiny. In her order closing the case, U.S. District Judge Kathleen Williams—a Barack Obama appointee—expressed multiple doubts about the finality of the process but appeared inclined to allow the settlement to proceed.
At least four other lawsuits or claims were subsequently filed attempting to halt the fund's implementation. Among them was a motion filed by 35 former federal judges seeking to intervene in the matter and press Judge Williams to investigate what they characterize as fraudulent proceedings.
The Investigation
In their latest filing—a 20-page reply motion—the former jurists have sharply rejected Trump's characterization of the settlement as routine civil litigation. They argue the case was fundamentally non-adversarial from its inception because Trump controlled both sides of the dispute.
"This suit was collusive from the start: the same person controlled it on both sides of the 'v'; President Trump," the filing states, noting that the Justice Department failed to raise "dispositive winning defenses" while agreeing to settle for what the ex-judges call an astronomical sum of taxpayer dollars just days before the court was set to question the parties' adversarial status.
The former judges further contend Trump's legal team engaged in procedural maneuvers specifically designed to evade judicial scrutiny. After invoking the court's inherent authority themselves to pause proceedings, Trump's lawyers later argued that a voluntary dismissal notice stripped the court of power to investigate whether the settlement's rationale rested on a collusive lawsuit.
"If Plaintiffs believe they can effectuate all the parts of their 'settlement' without the existence of this lawsuit, they would not have tried so mightily to evade this Court's inquiry into lack of jurisdiction," the reply motion observes. "Contrary to Plaintiffs' suggestions, the Court's investigatory power is not defeated by a voluntary dismissal. The court retains jurisdiction to vindicate its integrity even after the underlying action has ended."
The ex-judges also took aim at defense arguments that civil settlements are rational when litigation costs exceed settlement expenses, calling this justification "laughable" given the settlement's size and what they describe as an extraordinarily broad release of potential tax claims.
Among the more controversial provisions was an agreement to bar the IRS from auditing past or present tax returns belonging to Trump, his sons, or the Trump Organization—a form of relief the former judges argue dwarfs any conceivable litigation defense cost.
Trump's legal team has pushed back vigorously against the intervention motion. In a 22-page response, his lawyers called the ex-judges' filing "baseless" and described it as a "frivolous motion to reopen a case that was lawfully and properly dismissed." They argued the former judges lack standing to invoke their chosen procedural attack on the settlement.
Key Takeaways
- Trump filed suit against the IRS in January 2026, later reaching a $1.776 billion settlement creating an "anti-weaponization fund"
- The case was closed at Trump's request despite Judge Williams expressing doubts about its legitimacy and finality
- Thirty-five former federal judges are pushing for judicial investigation into alleged collusion and fraud on the court
- Former judges argue Trump controlled both sides of the litigation, rendering it non-adversarial and jurisdictionally improper
- A key settlement provision bars IRS audits of Trump's tax returns—a relief ex-judges say "dwarfs any conceivable cost of defense"
What's Next
Judge Williams must decide whether to exercise her court's inherent authority to investigate the former judges' fraud allegations or accept the settlement as finalized. The judge previously signaled reluctance to intervene but expressed multiple doubts about the process before closing the case in May.
The legal battle over the fund's implementation could extend to appellate courts, regardless of how Judge Williams rules on the ex-judges' motion. Critics have vowed to continue challenging the settlement through multiple avenues, arguing that allowing such a large payout without adversarial proceedings would establish a dangerous precedent.