Judge says Trump sued IRS for 'improper purpose'; refers his lawyer to bar

A Florida federal judge in a scathing order Monday said President Donald Trump filed a $10 billion lawsuit against the Internal Revenue Service “for an improper purpose” — to gain the appearance of “judicial legitimacy” for a controversial settlement with the Department of Justice.

That settlement in May briefly led the DOJ to create a since-abandoned $1.8 billion “lawfare” fund to compensate purported victims of prosecutorial overreach by the department.

It also led to Trump, his family members and related business entities being granted effective immunity from audits, prosecution or regulatory enforcement action by the IRS for tax returns filed up to the date of the settlement in May.

Judge Kathleen Williams, in her new order in U.S. District Court in Miami, said that because Trump has control over the DOJ and the IRS, “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.”

“This action was never about a party seeking judicial resolution of a legal issue or a factual dispute,” Williams wrote.

“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 judge wrote.

Williams, in her order, referred Trump’s lawyer in the suit, Alejandro Brito, to the Florida bar for consideration of whether Brito should be disciplined in light of her findings.

And Williams ordered a copy of the order to be sent to the New York State Bar, of which Acting Attorney General Todd Blanche is a member, as well as to the District of Columbia Bar, of which Associate Attorney General Stanley Woodward is a member.

Blanche, who is Trump’s former criminal defense lawyer, was responsible for signing off on the settlement with Trump on behalf of the IRS, which the president had sued over the leak of his tax records by an agency contractor.

Trump has nominated Blanche to serve as attorney general. The Senate Judiciary Committee is due to hold hearings on Blanche’s nomination on Wednesday and Thursday.

Williams barred Trump, the DOJ and other parties in the case from using “the purported ‘settlement agreement’ ” in judicial or other proceedings as evidence of a settlement of the lawsuit.

Williams’ order suggests that Trump no longer has protection from IRS enforcement action in the future related to the previously filed returns. The IRS is unlikely to take such action while Trump is still president. His term expires in January 2029.

The order also implies that the DOJ cannot resurrect its $1.8 billion fund, which was quickly abandoned after blowback by members of Congress over concerns it would be used to compensate people who attacked the U.S. Capitol and police there during the Jan. 6, 2021, riot by Trump supporters.

A federal judge in Virginia on June 25 said that a lawsuit challenging the fund could proceed, citing the fact that the DOJ has refused to confirm in writing that the fund is dead.

Williams’ order came in response to a brief filed by 35 former judges calling on her to reopen the case, which Trump and the IRS settled before Williams could rule on the question of whether the parties were actually adverse to each other given Trump’s position as president and head of the executive branch of government, which includes the IRS.

“The court’s opinion is a resounding victory for the rule of law,” said the lawyers who represented the judges, Norm Eisen and Matt Platkin, in a statement.

“We are proud to represent these former judges in presenting the arguments that the court adopted,” the attorneys said.

A spokesman for Trump’s legal team, which includes Brito, in a statement responding to the order, 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,” the spokesman said.

The White House declined to comment to MS NOW, referring questions to the Trump legal team spokesman.

CNBC has requested comment from the DOJ.