Judge sanctions lawyers over Trump IRS lawsuit

A federal judge in Florida rebuked President Donald Trump and the Justice Department on Monday over a lawsuit against the IRS, finding the case was brought in “bad faith” and for an “improper purpose” to give legal cover to a settlement involving taxpayer funds and protections for Trump-linked people and entities.

U.S. District Judge Kathleen Williams imposed professional penalties on lawyers involved in the case and barred Trump, the Justice Department and the IRS from using provisions of their agreement as evidence of a settlement in judicial, administrative, regulatory or other official proceedings.

The 56-page order centered on Trump’s $10 billion civil lawsuit against the IRS and Treasury Department. Trump, his two sons and his company alleged the agencies failed to prevent a former IRS subcontractor from improperly disclosing his tax returns and related records to news outlets, including The New York Times and ProPublica.

Williams, an appointee of President Barack Obama, said the case was not an ordinary lawsuit between adverse parties because Trump, as president, has authority over the Justice Department, Treasury Department and IRS.

“After a review of the record, and the Parties’ statements, the Court declines to adopt or accept the credulous exercise of divorcing President Trump’s current job title from an understanding of what happened here,” Williams wrote.

She concluded the lawsuit “was not brought to vindicate rights,” but to “manipulate the judicial process.” The case, she wrote, “was brought for an improper purpose — to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.”

“In sum, the facts before this Court demonstrate there was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail,” Williams wrote.

The agreement reached in May initially included a $1.776 billion “anti-weaponization” fund intended to provide taxpayer-funded payouts to people who alleged the federal government had been “weaponized” against them, CBS News reported. Williams said the amount “speaks of a ‘branding’ effort rather than a deliberate and thoughtful calculation of damages.”

Acting Attorney General Todd Blanche later said the Justice Department was “not moving forward” with the fund. NBC News reported that Blanche has refused requests from Congress to put that statement in a written declaration. Another provision that permanently bars the IRS from pursuing tax claims against Trump, his oldest sons, his company or family-affiliated companies remains intact, according to CBS News.

Williams referred Trump lawyer Alejandro Brito to the Florida Bar for potential disciplinary action and limited attorney Daniel Epstein’s ability to practice in the Southern District of Florida for one year or until further order of the court. Brito and Epstein did not immediately respond to requests for comment.

The judge also directed that her order be sent to the State Bar of New York and the District of Columbia Bar, where disciplinary proceedings are ongoing against Blanche and Associate Attorney General Stanley Woodward over alleged ethical violations, NBC News reported. Blanche and Woodward signed documents related to the settlement.

Williams said the Justice Department could have defended the case by arguing Trump waited too long to file his claim, but instead chose to strike a deal. She accused the department of “abdicating its responsibility to zealously defend the interests of the United States.”

A spokesperson for Trump’s legal team said, “The IRS wrongly allowed a rogue, politically-motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica and other left-wing news outlets, which was then illegally released to millions of people. President Trump continues to hold those who wrong America and Americans accountable.”

Spokespeople for the Treasury Department and Justice Department did not immediately respond to NBC News requests for comment.

The order followed concerns raised by 35 former judges, who asked Williams to reopen the case and argued the agreement was “the product of collusion” and a “fraud on the court.” Blanche is expected to face questions about the fund and audit agreement at his Senate confirmation hearing Wednesday.