Judge Sanctions Trump Lawyer Over IRS Settlement, One Day Before Blanche's AG Confirmation Hearing

Todd Blanche walks into his Senate Judiciary Committee confirmation hearing Wednesday carrying a 56-page problem he can't spin away.

U.S. District Judge Kathleen Williams ruled Monday, July 13, that President Trump's $10 billion civil lawsuit against the IRS was filed for an "improper purpose" and that Trump and his two oldest sons "acted in bad faith," according to CBS News. Williams referred Trump attorney Alejandro Brito to the Florida Bar for potential discipline and restricted a second Trump lawyer, Daniel Epstein, from practicing in the Southern District of Florida.

The case traced back to a leak of Trump's tax returns by a former government contractor. Trump sued the IRS over it earlier this year. In May, the two sides reached a settlement that included a $1.776 billion "anti-weaponization" fund meant to pay out people who claimed the federal government had been "weaponized" against them, plus a provision permanently barring the IRS from pursuing tax claims against Trump, his two oldest sons, and Trump-affiliated companies.

Williams wasn't buying it. Her order says there was "never adverseness between the Parties," "never a case or controversy," and "never a question as to who would prevail." In plain terms, she concluded the lawsuit was theater, engineered to get a court's stamp of approval on a deal that gave Trump legal immunity he couldn't have gotten through an actual adversarial process.

The order didn't stop at sanctioning the two attorneys. Williams barred the Justice Department, the IRS, and Trump himself from citing any part of the settlement as evidence of a legitimate deal in any future judicial, administrative, or regulatory proceeding. She also directed copies of her ruling sent to the State Bar of New York and the D.C. Bar, the bar associations for Blanche and Associate Attorney General Stanley Woodward, both of whom signed documents tied to the settlement.

Blanche, Trump's former personal defense attorney and now the president's nominee to run the Justice Department permanently, is set to face the Senate Judiciary Committee for his confirmation hearing. CBS News reports Democrats plan to press him hard on politicized prosecutions, the department's handling of the Jeffrey Epstein files, and his role pushing the anti-weaponization fund. Now they have a federal judge's finding of bad faith to work with.

Blanche already backed off the fund once

After bipartisan blowback, including criticism from Republican Senators John Cornyn of Texas and Thom Tillis of North Carolina, Blanche testified to a House committee last month that the Justice Department was scrapping the payout plan. That was supposed to close the chapter.

In a separate case challenging the legality of the fund, the Trump administration last month refused to submit a sworn declaration from Blanche and Treasury Secretary Scott Bessent reaffirming that the fund is dead, calling the request "unnecessary," according to CBS News. A hearing in that case is scheduled for Wednesday in federal court in Virginia, the same day as Blanche's confirmation hearing.

If the fund is truly dead, refusing to say so under oath is an odd choice. It's a fair question why the administration would balk at a sworn statement reaffirming something Blanche already said publicly. Either the fund isn't as dead as advertised, or the Justice Department simply doesn't want to bind itself with a formal declaration it might need to walk back later. Both are legitimate things for senators to ask about Wednesday.

The political math has shifted

Republicans hold the majority on the Judiciary Committee, and most observers still expect Blanche to be narrowly confirmed, per CBS News. But the panel's margin tightened after Sen. Lindsey Graham of South Carolina, one of Blanche's most senior GOP defenders and a staunch ally, died late Saturday, July 11. That leaves Blanche with less institutional cover from a committee where Cornyn and Tillis have already shown willingness to break from the party line on this specific issue.

A spokesman for Trump's legal team responded to Williams' ruling by defending the original lawsuit, telling CBS News the IRS "wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization" and that Trump "continues to hold those who wrong America and Americans accountable." That's the administration's core defense: the leak was real, the anger was justified, and the settlement was a legitimate way to resolve it. Whether a settlement engineered without a genuine adversarial dispute qualifies as legitimate is exactly what Judge Williams said it does not.

No criminal charges have been filed against Blanche, Woodward, Brito, or Epstein. The bar referrals are professional disciplinary matters, not criminal proceedings, and it will be up to the Florida Bar and the D.C. Bar to decide whether further action is warranted. Wednesday puts two separate legal fights on the same clock: senators questioning Blanche about a fund he says is dead, and a Virginia judge weighing whether the administration will say so under oath.