Since Our Last Report: The Story Blew Wide Open

When we last covered this, a federal judge had blocked the fund and a June 12 hearing was set. A lot has happened since.

Thirty-five former federal judges filed a 24-page motion on May 27 asking U.S. District Judge Kathleen Williams to reopen the case and investigate whether the entire deal was fraud on the court, according to USA Today. These aren't random activists. The group includes Michael Luttig — a prominent conservative jurist and one of the star witnesses at the House January 6 Committee hearings.

What the Ex-Judges Actually Said

"The Court was deceived," their motion reads bluntly.

Their argument: Trump and his co-plaintiffs filed a motion to withdraw the lawsuit against the IRS without ever mentioning a settlement was already in the works. Judge Williams never got to weigh in on the deal — she was bypassed entirely. The settlement "commandeers the contrived sum of $1.776 billion from the United States Treasury, to be handed out to recipients chosen by a commission effectively controlled by the President," the motion states, per USA Today.

They're invoking a federal rule of civil procedure that allows courts to reopen cases involving fraud against the court. They want an inquiry into whether there was even a legitimate "case or controversy" to settle in the first place.

"The parties' settlement was not, and never will be, legally justified," the motion reads.

Blanche's Senate Hearing: More Questions Than Answers

AG Todd Blanche sat before the Senate Appropriations Subcommittee on May 19 and faced tough questioning, according to Forbes.

He called the fund structure "unusual … but not unprecedented." He deflected questions about whether violent criminals — including people convicted of assaulting police officers — could receive payouts, saying the five-person commission would make those calls, NOT him. He claimed Trump "did not direct me to do anything" in creating the fund.

Then, almost immediately after the hearing, The New York Times reported that IRS attorneys had actually recommended the agency fight the lawsuit, not settle it. They had legal arguments prepared for dismissal. Those arguments were never made in court. The case was settled before the IRS could even formally respond.

Blanche's own words created tension in his account. He told Sen. Jack Reed (D-R.I.) he was "confident [Trump's] lawyers urged the president's desires" in negotiating the settlement. So Trump didn't direct him — but Trump's lawyers were expressing Trump's desires.

Two New Lawsuits Filed Friday

Two fresh civil complaints hit federal courts Friday — one in Washington, D.C., one in Alexandria, Virginia — according to CNBC.

The Virginia suit was filed by Andrew Floyd (a former federal prosecutor who says he was fired for prosecuting January 6 defendants), Jonathan Caravello (a California professor acquitted of felony assault charges after a 2025 immigration raid arrest), and the city of New Haven, Connecticut (which is being sued by the Trump administration for being a sanctuary city). Their complaint alleges the fund violates the Administrative Procedure Act and the Constitution.

The D.C. suit was filed by Citizens for Responsibility and Ethics in Washington (CREW) and alleges APA violations plus Freedom of Information Act violations.

"Created following a collusive agreement between the President and his own administration, this Fund has no congressional authorization, no basis in law, and no accountability," the Virginia complaint states, per CNBC.

The structural mechanics: Trump sued the government he runs, settled with himself, and is now using taxpayer money to pay his supporters. Trump gets zero direct money — but his family gets IRS immunity on their tax returns as part of the deal.

Congress and the Approval Question

This fund was created without a single vote on Capitol Hill. $1.776 billion in taxpayer money, allocated by executive fiat, to a commission appointed entirely by the attorney general. Separation of powers questions cross party lines.

Former AG Pam Bondi told the House Oversight Committee in a closed-door session that responsibility for the Epstein files — a separate but related accountability question — sits with Blanche and FBI Director Kash Patel, according to The New York Times. Bondi essentially told Congress she had no power over her own department.

What Comes Next

A bipartisan group of 35 former judges has called this a fraud on the court. Two new lawsuits say it's unconstitutional. The IRS's own lawyers wanted to fight the case — and were ignored. The AG's testimony contained contradictions.

June 12 is the next date on the calendar. Judge Williams holds the hearing. If she finds fraud, the ruling could upend the entire arrangement.

Every taxpayer has $5.40 riding on this fund. The questions about where it's going remain unanswered.