A federal judge in South Florida ruled Monday that President Trump's $10 billion lawsuit against the IRS was filed for an "improper purpose," voided a landmark settlement that had shielded Trump and his family from tax audits, and referred one of Trump's attorneys for possible disciplinary action before the Florida Bar.
U.S. District Judge Kathleen Williams, an Obama appointee who has served on the bench since 2011, issued a written ruling that amounted to a sweeping rebuke of the legal strategy behind the case. The ruling lands just days before Acting Attorney General Todd Blanche faces Senate confirmation hearings for his nomination to permanently lead the Justice Department, a collision of legal and political calendars that will sharpen scrutiny of the administration's handling of the matter.
The core of Williams's finding: Trump and the IRS were never truly adversarial parties, and the lawsuit was engineered to give judicial cover to a settlement that served the president's personal interests while he simultaneously controlled the federal agency on the other side of the case. Fox News Digital reported that Williams found Trump was "using the lawsuit to advance his own interests while controlling the federal agency he had sued."
The lawsuit traces back to 2019, when IRS contractor Charles Littlejohn leaked Trump's confidential tax records. Littlejohn later pleaded guilty to one count of unauthorized disclosure of tax return and return information. Trump, his two eldest sons, and the Trump Organization sued the IRS and the Treasury Department, seeking at least $10 billion in damages.
What emerged from the litigation was not a typical damages award. The proposed settlement would have granted Trump and his adult children a permanent exemption from IRS audits on past tax filings. It also envisioned the creation of a $1.776 billion "Anti-Weaponization Fund", a pool of taxpayer money intended to compensate individuals the administration described as victims of a weaponized justice system. AP News reported that the fund was designed to compensate political allies, and that the settlement included immunity from tax audits for Trump and family members.
The Anti-Weaponization Fund drew bipartisan backlash. Acting AG Blanche moved to walk back that portion of the proposed settlement, and the fund was ultimately dropped. But the damage to the case's credibility was already done.
Williams did not hold back. She found the lawsuit constituted an abuse of the court system, an attempt to manufacture the appearance of a legitimate legal dispute where none existed. In her ruling, she wrote:
"The nature of the suit itself and the conduct of the Parties and counsel from its filing make plain that this was an attempt to use the Court to provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the President and to earmark billions of dollars from American taxpayers to redress grievances not defined in the law."
That language, drawn from the ruling itself, goes beyond a procedural finding. Williams characterized the entire enterprise as self-dealing, the president suing an agency he controls, then settling with that agency on terms that benefited himself and his associates.
The judge reserved particular criticism for Blanche. During testimony on May 19, 2026, Blanche was asked why the settlement agreement had not been submitted to the court for review. His answer: "there is no judge" because the case had been dismissed, and therefore "no mechanism" existed for reviewing the agreement. Williams called that response "at best, misleading and, at worst, disingenuous."
She went further. Williams found that Blanche appeared to be speaking for both sides of the lawsuit, plaintiff and defendant, which, in her view, proved the case was never a genuine dispute between adverse parties.
"Acting Attorney General Blanche's apparent capacity to speak for both Plaintiffs and Defendants, sign a settlement document on behalf of all Parties to this action, and then repudiate part of that agreement, demonstrates that there was only one party whose interests were being represented throughout this case."
That is a damaging finding. The Supreme Court's adversity doctrine requires that parties to a lawsuit have genuinely opposing interests. Williams concluded that standard was never met.
Williams referred Trump attorney Alejandro Brito to the Florida Bar for possible disciplinary action. Fox News Digital reported that the outlet reached out to Brito for comment but noted no response. The White House referred inquiries to Trump's personal attorneys.
Breitbart reported that a second attorney, Daniel Epstein, was barred from filing in the Southern District of Florida for up to a year, a sanction that underscores how seriously Williams viewed the conduct of the legal team. The judge also ordered broader sanctions against attorneys involved in the case.
The Washington Examiner reported that Williams's ruling strips Trump and his adult children of their previously granted permanent exemption from IRS audits on past tax filings. The settlement, in other words, is dead.
The timing could not be worse for the administration. Blanche's confirmation hearings to become the permanent Attorney General are set to begin Wednesday. Williams's ruling hands Senate Democrats a ready-made line of questioning: Why did the acting head of the Justice Department appear to represent both sides of a lawsuit involving the president? Why did he characterize the absence of a judge as meaning no review was possible, when the case had been dismissed under circumstances the court found troubling?
Williams, a former Federal Public Defender for the Southern District of Florida before her appointment to the bench, framed the stakes in her ruling. She reminded the parties that they were not "private actors to a mine-run dispute, recounting their proficiency in the art of the deal they negotiated." Instead, she wrote, they were "public servants, the pinnacle of the Executive Branch, sworn to uphold the law, faithfully perform the duties of their office, and protect the interests of the American public."
That framing, public servants, not private dealmakers, is the sharpest edge of the ruling. It rejects the premise that a sitting president can sue his own executive-branch agency, settle on favorable personal terms, and call it justice.
Several questions remain open. What specific conduct by Brito prompted the Florida Bar referral beyond the broader "improper purpose" finding? What were the full terms of the proposed settlement before the Anti-Weaponization Fund was stripped out? And what role, if any, did Associate Attorney General Stanley Woodward play in the settlement negotiations? Newsmax noted that both Blanche and Woodward had previously represented Trump and his associates before joining the DOJ, a detail that deepens the conflict-of-interest concerns Williams raised.
The original leak of Trump's tax records by Charles Littlejohn was a genuine wrong. An IRS contractor broke the law, pleaded guilty, and violated the privacy of a sitting president. That grievance was real. But the legal vehicle built to address it, a $10 billion lawsuit that morphed into a self-serving settlement with audit immunity and a billion-dollar fund for political allies, was something else entirely.
Williams's ruling does not question whether Trump was wronged by the leak. It questions whether the lawsuit and its proposed settlement were ever about redressing that wrong, or whether they were about leveraging the federal judiciary to rubber-stamp arrangements that no private citizen could have obtained.
Conservatives who rightly condemned the weaponization of federal agencies against Trump should be equally clear-eyed about what happened here. The answer to government overreach is not to build a legal apparatus that routes taxpayer money to presidential allies and shields the president from the tax enforcement that applies to everyone else. That is not draining the swamp. That is redirecting the current.
When the people at the top treat the courts as a formality and the public treasury as a personal account, the taxpayers who fund both deserve better, no matter which party holds the White House.
