A “What’s Going On Here?” Ethics Challenge: Trump’s $1.7 Billion IRS ‘Slush Fund’ Settlement

Whatever is going on, it’s unethical.

President Trump sued the Internal Revenue Service in January of this year, claiming that the agency had not done enough to prevent the leak of his tax information to ProPublica and the New York Times by Charles Littlejohn, a former I.R.S. contractor who pleaded guilty to the crime in October 2023. The lawsuit, asking $10 billion in damages, was remarkable in many ways, not the least of which was that the President of the United States was suing an executive branch agency of the Treasury Department, which is under his control. Whether he could do that was a key issue, as was whether his law suit came too late: by some calculations, the statute of limitations ran out before the President filed his suit.

Meanwhile, there was also a question regarding whether Justice Department lawyers would be conflicted out of defending the suit. And whether the I.R.S. could be held liable for the conduct of Littlejohn, who was a contractor and not an employee.

I.R.S. officials prepared a 25-page memorandum outlining what they judged as fatal flaws in Trump’s suit and advised the Justice Department to move to dismiss it. The memo was provided to Treasury officials in April, but no one is saying whether it ever got to DOJ before any of its lawyers ever appeared in court to respond to the suit or dispute any of Trump’s claims, came to a bizarre settlement. DOJ agreed to an unusual deal that creates a $1.8 billion fund in exchange for Trump withdrawing his suit. The money is being called an “anti-weaponization” fund to compensate people who say they were wrongly targeted by the federal government. Todd Blanche, the acting Attorney General, will appoint five people to a commission that will oversee the distribution of the money, though the President will be able to fire any of the commission members, or, for that matter, Blanche, who had previously been one of Trump’s lawyers.

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