Trump’s smash and grab of the Treasury

On the very first day of his second term, Donald Trump pardoned all of the “J6ers” — those Trump supporters who, at his behest, sought on January 6, 2021 to prevent the peaceful transfer of power to Joe Biden by laying siege to the Capitol and violently attacking the Capitol police defending it. Hundreds of these traitors were convicted of felonies and imprisoned.

The pardons were a monstrous and unparalleled breach of the public trust and poured salt on the gaping wound the country suffered on that darkest of days for our democracy.

On May 18, 2026, Trump plumbed even greater depths of depravity. Through his acting Attorney General Todd Blanche — that thug with a law license who had previously served as Trump’s criminal defense attorney — he announced the creation of a $1.776 billion “anti-weaponization” fund, which he subsequently made clear was intended to reward the pardoned J6ers. Even some Republicans could not contain their disgust. Senator Mitch McConnell, for example, described it as a “slush fund to pay people who assault cops” and called it “morally wrong” and “utterly stupid.”

The fate of the slush fund is unclear. After some initial Republican pushback, Blanche told Congress that he does not intend to move forward with it, but he refused to put that pledge in writing. Even after Blanche’s comments, Trump told the press he “loves” the slush fund and “think[s] it’s so important.” Senate Republicans, meanwhile, killed a proposed bill that would have abolished the fund. So the matter is far from dead, and it remains important to understand why this unholy scheme is so rotten, even apart from the moral indefensibility of enriching cop-beating traitors.

Under the Constitution, only Congress holds the power of the purse, and the slush fund has not been sanctioned by Congress. So where do Trump and Blanche intend to get the money to pay the J6ers? The answer is that they devised a scheme to circumvent the constitutional bar on appropriations unapproved by Congress and pay the J6ers out of the United States Treasury, with our taxpayer dollars.

This plan is probably themost brazen act of corruption in presidential history. It is based on a criminal conspiracy to defraud the United States. Here’s how it works and why it’s illegal:

According to Blanche, the money for the slush fund will come out of what’s known as the Judgment Fund of the Department ofJustice. On a regular basis, Congress appropriates money to this Fund to enable DOJ to pay out court-ordered judgments and settlements. Congress granted DOJ a certain amount of limited discretion to disburse these funds, in order to avoid having to make a separate appropriation for each of the thousands of judgments or settlements it pays out each year.

But, by statute, to receive money from the Judgment Fund, a claimant must have a valid court order or a “compromise settlement” of a lawsuit. So Trump and Blanche came up with a lawsuit: Trump sued the IRS over the (admittedly) unlawful release of his tax returns and claimed $10 billion in damages. Then they purported to “settle” this claim for $1.776 billion, theoretically unlocking the money available in the Judgment Fund.

The problem with this scheme — and why it’s illegal— is that the lawsuit and the ensuing “settlement” were entirely bogus.

The lawsuit was a sham from the outset. Under the Constitution, federal courts can only adjudicate actual “cases” or “controversies.” This requires a bona fide dispute between two distinct, adversarial parties. Trump’s lawsuit against the IRS lacked the necessary adversity of interest, because he controls his opponent. As he has said repeatedly, “I’m sort of suing myself.” Since there was no true case or controversy, there was no lawsuit that the court could adjudicate.

Moreover, even if this supposed lawsuit qualified as a case or controversy, it would still be utterly meritless and could not warrant any payout. The Justice Department had compelling defenses to it, including that it was barred by the statute of limitations because Trump brought it too many years past thedate his returns were disclosed. But instead of asserting any defense, the Department chose to lay down.

The $1.776 billion “settlement” of this bogus, collusive lawsuit is necessarily equally bogus and collusive. There cannot be a “compromise settlement” if there is no valid dispute to be compromised.

The bad faith, sham nature of the “settlement” is underscored by the fact that the returns of thousands of other taxpayers were also disclosed simultaneously with Trump’s returns, and many of those taxpayers also sued. Rather than settling those cases for any amounts (much less billions), the DOJ has vigorously fought attempts at recovery.

The amount of the “settlement” also highlights the phoniness of the entire undertaking. The notion that Trump should obtain control of almost $2 billion to dispense as he pleases because his tax returns were unlawfully disclosed is absurd on its face. Trump and Blanche have not even tried to justify this obscene amount.

By cooking up an ersatz lawsuit and “resolving” it with an equally ersatz “settlement,” the Trump/Blanche scheme violates the statute governing the Judgment Fund. Instead of a legitimate claim to taxpayer funds to resolve an actual dispute, this scheme instead defrauds the government and loots the Treasury.

It also constitutes a fraud on the court. Lawyers are under a sworn duty not to file lawsuits for improper or bad faith purposes. The only reason Trump filed his lawsuit was to create a false veneer of legitimacy for his claimto Judgment Fund dollars.

Judges do not like being unwittingly enlisted in fraudulent schemes. That explains why Judge Kathleen Williams, who presides over the lawsuit, has ordered Trump and the Justice Department to explain their conduct, and has ordered briefing on whether it should be considered a fraud on the court.

Regardless of any action Judge Williams takes, the fact remains that Trump and Blanche appear to have organized a criminal conspiracy to defraud the United States Treasury out of nearly $2 billion. Every lawyer involved in this sordid venture should be investigated for potential disbarment, and all involved should be investigated for potential criminal prosecution. There will be no such prosecutions in this administration. But there very well may be in the next: the statute of limitations won’t expire on this crime until 2031.

James Speyer is a lawyer and a volunteer with Lawyers Defending American Democracy. He lives in Sharon.