Acting Attorney General Todd Blanche and the Justice Department are facing mounting questions over the DOJ’s decision to settle a lawsuit between President Donald Trump and the IRS—and create a $1.8 billion fund expected to pay Trump’s allies—even as new reporting claimed the IRS was ready to vigorously defend itself in the suit.
Acting U.S. Attorney General Todd Blanche testifies during a Senate Committee on Appropriations, Subcommittee on Commerce, Justice, Science, and Related Agencies Hearing on Capitol Hill on May 19.
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Blanche testified Tuesday in front of the Senate Appropriations Committee’s Subcommittee on Commerce, Justice, Science, and Related Agencies, in a hearing focused on the Justice Department’s 2027 budget.
Blanche was immediately criticized for his role in setting up the settlement fund, in which the Trump administration committed $1.776 billion toward helping “victims of lawfare and weaponization,” and will be run by a five-person committee made up of people appointed by the attorney general.
The acting AG defended the fund under questioning from Democratic senators, acknowledging the structure was “unusual … but not unprecedented” and claiming it was not limited to Republicans and political allies of the president.
Blanche also deflected questions about whether people convicted of assaulting police officers and of other violent crimes could get payouts—saying the board of commissioners for the fund would make those determinations, not him—and attempted to distance Trump from the fund, claiming the president “did not direct me to do anything” in terms of reaching the settlement.
The New York Times reported shortly after the hearing ended that before the settlement was reached, IRS attorneys had actually recommended the agency instead try to dismiss the case, presenting legal arguments for why it should be dismissed.
Those arguments were never made in court and the case was instead settled before the IRS could even formally respond to the lawsuit, raising new questions about the government’s process for reaching the settlement—even as Blanche claimed Tuesday the fund was not politically motivated or created at Trump’s urging.
“The president did not set up this fund, it’s not a slush fund,” Blanche said Tuesday under questioning from Sen. Patty Murray, D-Wash, though he did later tell Sen. Jack Reed, D-R.I., he was “confident [Trump’s] lawyers urged the president’s desires” in negotiating the settlement.
While the government’s decision making behind creating the $1.8 billion fund remains unclear, the process of reaching the settlement had already been flagged as odd. Trump first sued the IRS in January, accusing the agency of violating his privacy after a contractor shared his tax returns, and talks of a settlement first began in April. Trump and his co-plaintiffs told the court April 17 they were already in discussions with the government about settling the case, even before the IRS could respond to the lawsuit’s allegations. They asked the court to pause proceedings while they first tried to settle, and Judge Kathleen Mary Williams, who oversaw the lawsuit, didn’t automatically agree, instead first asking Trump and the government to file briefs with the court over whether they were actually “adverse” parties in the lawsuit with opposing interests. Parties who aren’t opposed can’t sue each other—as then they could cooperate in the case—and Williams suggested it’s “unclear” whether Trump was actually a separate party from the IRS that he ultimately controls as president. Legal experts also raised questions about the timing, with an outside expert appointed by the court to weigh in on the issue noting it was “admittedly unusual” for the parties to engage in settlement talks before the IRS could respond. Trump and the IRS then settled the case only two days before they were required to tell the court why or why not the lawsuit should move forward—sparking criticism from Democrats and ethics experts that the president was trying to circumvent the courts by settling the case and getting a benefit from it before it could potentially be thrown out.
In addition to discussing the $1.8 billion fund, Van Hollen also asked Blanche if he would commit the Trump administration to not pardon people who were named in the government’s files on Jeffrey Epstein. While Blanche would not make that commitment, noting thousands of people were named in the Epstein files, many without doing anything wrong, he did claim the government would not pardon longtime Epstein associate Ghislaine Maxwell. “Yes I can commit to that, of course,” Blanche told Van Hollen.
While Trump’s settlement agreement says only that “confidential written reports” will be submitted to the attorney general detailing who gets money from the $1.8 billion fund, Blanche claimed Tuesday that those reports will be publicly released. The acting AG did not commit to making all information about the fund’s activities public, however, claiming that some information would remain private due to various privacy laws.
There are still a number of outstanding questions about the “anti-weaponization fund,” including when payouts will start and who exactly will receive one. People who claim to have been victimized by the Justice Department can voluntarily apply for relief through the fund, which will provide both “formal apologies” and monetary compensation. Blanche said Tuesday that commissioners could come up with rules around who can and cannot apply for relief through the fund, but claimed he would play no role in determining those rules.
Blanche has also come under fire for playing a role in establishing and overseeing the $1.8 billion fund from Democrats on the Senate Judiciary Committee. Democrats opened a probe Tuesday into whether the acting AG had been advised to recuse himself from overseeing matters into Trump, including his former client’s 10-figure settlement, sending letters requesting documents to the Justice Department and the assistant attorney general.
While Blanche was predominantly questioned by Democrats about the $1.8 billion fund during the Senate hearing Tuesday, an increasing number of Republican senators are expressing concerns about the settlement. Senate Majority Leader John Thune, R-S.D., told reporters Tuesday he was “not a big fan” of the settlement, adding, “I don't see a purpose for it.” Sen. John Kennedy, R-La., told reporters Monday he had “a lot” of questions about the fund—though he didn’t challenge Blanche on the fund during Tuesday’s hearing—while Sen. Bill Cassidy, R-La., after losing his primary race for reelection, more explicitly slammed the fund, saying, “People are concerned about making ends meet, not about putting a slush fund together without a legal precedent.”
ForbesWhy Trump’s $1.8 Billion IRS Settlement Could Actually Cost Him MoneyBy Alison Durkee
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