U.S. District Judge Kathleen Williams has handed President Donald Trump a ruling with the kind of symmetry Washington usually saves for satire. President Barack Hussein Obama nominated Williams in 2011, and 15 years later, she's effectively stripped Trump's IRS settlement of legal use and pushed several lawyers toward professional discipline.
The political circle closed with almost comic precision.
Trump had a legit grievance; Charles Littlejohn, an IRS contractor, stole and leaked Trump's tax records with confidential data from thousands of wealthy taxpayers.
Littlejohn pleaded guilty and received five years in prison.
Trump, Donald Trump Jr., Eric Trump, and the Trump Organization sued the IRS and Treasury Department for $10 billion in January.
The settlement turned a valid complaint into a sweeping political deal. Trump dropped the suit in May after the government agreed to a formal apology, a $1.776 billion Anti-Weaponization Fund, and broad protections against tax audits and other government claims.
Acting Attorney General Todd Blanche later said the fund wouldn't proceed, but he didn't withdraw the audit protections.
Williams found there was never a true dispute because Trump controlled both sides. He sued in his personal capacity while the IRS and Treasury remained executive agencies under his authority. From the ruling:
But perhaps the most startling misstatement advanced by Plaintiffs is their characterization of this case as “ordinary.” (DE 89 at 9). The Parties here are not private actors to a mine-run dispute, recounting their proficiency in the art of the deal they negotiated. Lead Plaintiff and Defendants are 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. The issue before the Court is whether, instead, they ignored ethical norms, court rules, and legal authority to manipulate the judicial process. The issue is whether they did so to gild their efforts to gain unprecedented access to the public fisc with the patina of legitimacy. There is nothing “ordinary” about this case; it is the very definition of sui generis.
No government lawyer filed an appearance or defense during the case's 109 days. Williams concluded that the plaintiffs acted in bad faith and used federal litigation to lend legitimacy to an agreement they didn't want reviewed by a court.
She presented pointed penalties. Williams referred Trump lawyer Alejandro Brito to the Florida Bar, blocked Daniel Epstein from appearing pro hac vice in the Southern District of Florida for one year, and sent her order to bar authorities handling complaints involving Blanche and Assistant Attorney General Stanley Woodward.
She also barred the parties from calling the deal a settlement or using its terms in any official proceeding. Monetary sanctions could still follow through reimbursement requests from outside groups that briefed the court. From the ruling:
These facts lead to the inexorable conclusion that the “settlement” terms, the individuals who signed the “settlement” as well as the putative beneficiaries of the “settlement,” demonstrate a shared, unitary interest. And the unilateral revision and renunciation of the “Fund” component of the “settlement” demonstrate the fact that all Parties were aligned, and ultimately, undifferentiated. This action was never about a party seeking judicial resolution of a legal issue or a factual dispute. 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. The President may be the functional “dominus litus” of the Executive Branch, but as a party to a civil suit, he, as well as all the parties and lawyers before a court, are bound by the rules.
Conservatives will notice who appointed Williams, and they should. Obama's IRS used improper screening terms, including “Tea Party,” “Patriots,” and “9/12,” while reviewing tax-exempt applications.
Groups with conservative values endured heightened scrutiny and long delays, and the government later settled cases involving nearly 500 plaintiffs. A later inspector general review found liberal groups were screened too, but the original abuse and its unequal effect on conservative organizations remain part of Obama's record.
The irony doesn't make Williams right on every legal point, and Trump can challenge her order. It does expose the weakness in answering past government abuse with a deal that looks like present-day self-dealing.
A president who condemns weaponization can't ask his Justice Department to sign away tax scrutiny, create a $1.776 billion fund, and expect a federal court to treat the arrangement as ordinary litigation.
Obama presided over an IRS scandal that became a lasting warning about government power. The judge he appointed has now used her own power to dismantle Trump's response to another IRS abuse.
The circle is complete, and the lesson is uncomfortable for both parties: government power doesn't become cleaner simply because your side holds the pen.
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