Judge Is A Big No On Trump's Slush Fund

Tonight: Long, but worth it. Judge Williams wrote an opinion where every word is precise and important, as she builds an airtight argument for reopening U.S. v. Trump for just long enough to undo Trump’s slush fund deal with himself and make it stick, hopefully, on appeal. Let’s dive in:

Back on May 31, which seems like a lifetime ago even though it was only six weeks, I wrote to you on a Sunday evening: “The $1.776 billion slush fund Trump is trying to get the courts to sign off on so he can reward January 6 defendants for their loyalty came under attack from an unexpected front last Wednesday, when 35 former federal judges filed a brief urging Judge Kathleen Williams to reconsider her dismissal of the case. They argued that the situation requires “judicial review of the extraordinary—and historically unprecedented—circumstances presented by this litigation and by the collusive ‘settlement’ that invokes this litigation as the legal justification for its terms.”

The issue, as you may recall, was that the lawsuit Trump brought did not involve a legitimate adversarial process. With Trump on “both sides of v” in the case, as both the plaintiff and the head of the unitary executive responsible for the decisions made by the defendant, the IRS, the judges suggested the case was tantamount to a fraud on the court. We discussed the case, why it was dismissed, and the motion filed by the former judges here if you want a refresher.

The Judge ends her opinion like this: “John Adams warned, ‘Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.’ Thus, whatever may be the Parties’ wishes, inclinations, or the dictates of their passion, they cannot alter the state of the facts or evade the rule of law.” Let’s see how and why she got there:

In a remarkable fifty-six-page decision, Judge Williams made her decision today. She is a former federal prosecutor who also served as a federal defender, and then as the Chief federal defender, before being appointed to the bench by President Obama in 2011. It doesn’t take her long to signal where her opinion is headed. On page 2 she writes, “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.”

In footnote 2 (you always read the footnotes in an opinion like this), the judge crystallizes her view of just how deep Trump’s hypocrisy goes: “Plaintiffs [Trump] also—with no apparent sense of irony—criticize the non-party movants’ [The 35 judges who filed the motion to reopen the case] political motivations, their previous disinterest in the case, and their purported inappropriate promotion of ‘abstract grievance[s].’”

She frames the case and the issue before her like this, “the most startling misstatement advanced by Plaintiffs is their characterization of this case as ‘ordinary.’” Yes, Trump and his lawyers really had the audacity to say that. The Judge calls them out for it—all the way out. “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,” Judge Williams concludes. “It is the very definition of sui generis,” lawyer-speak for being in a class by itself.

The case happened because a contractor leaked tax information for Donald Trump and lots of other people. As the judge points out in footnote 4, that happened during Trump’s first term. The man was prosecuted by the Biden administration and received a sentence of 60 months in custody. He was sued by a number of the other folks. They all complied with the two-year statute of limitations for filing suit.

Trump filed after the statute of limitations ran out. The judge noted that “In every case naming the government as a defendant, the DOJ engaged in a vigorous defense. That is, every case until the instant litigation.” Despite the statute of limitations issue and a host of other problems with the case, DOJ simply rolled over for Trump.

There must be an actual controversy between two parties with different interests on either side of the case for the court to have jurisdiction over a case. It’s not just a technicality. “Consonant with the general principle that ‘no person may sue himself[,]’” adverseness is lacking where one party controls the other party, and courts don’t hear cases like that. The Judge finds plenty of reasons here that the parties aren’t adverse including:

• One Party Controls This Litigation: “Defendants are the Treasury Department—an Executive agency—and the IRS, the largest bureau of the Treasury Department. Both Defendants are unquestionably part of the Executive Branch and ultimately answer to its Chief Executive, President Trump.” Hoisted on his own unitary executive theory!

• The Conduct of Executive Branch Actors Demonstrates Lack of Adverseness and Improper Motive: “Here, Defendants’ actions (or inaction), as directed by the DOJ, and the subsequent ‘resolution’ of this lawsuit leads the Court to conclude the Parties’ interests were ‘one and the same.’”

But in the judge’s view, it goes beyond that. She is particularly concerned that high level Justice Department officials are still representing, and indeed have an obligation to continue considering, the interests of their former clients from private practice. The problem is that the Associate Attorney General, who signed the slush fund settlement agreement, Stanley “Woodward represented several individuals charged in connection with the events of January 6, 2021, at the United States Capitol. He also represented Walt Nauta, who was President Trump’s personal aide and a co-defendant in the criminal matter involving the return of classified documents at Mar-a-Lago.”

It’s a significant concern to the judge that the settlement agreement, created by the stroke of Woodward and Blanche’s pens, is meant to fund claims raised by people who were defendants in a number of different situations involving Trump, including the Mar-a-Lago Documents Case and January 6, which she writes, “have been referenced as quintessential Anti-Weaponization and Lawfare claims.” Then she draws the trap shut, noting that “Instead of either recusing because of their previous representations or vigorously defending this lawsuit as required to do so by DOJ policies and procedures, these lawyers [Blanche and Woodward] agreed to a ‘settlement’ involving a staggering amount of money potentially benefitting former clients.”

Blanche has additional issues. He was also involved with the Release Order, which the Judge notes was “signed only by Acting Attorney General Blanche, extends a blanket grant of immunity to all Plaintiffs and their families and ‘affiliates,’ and precludes all ‘current or possible’ investigations or actions before any other agencies or departments. The Release Order also purports to bar the IRS from conducting any future tax audits of President Trump, his sons, and their entities.”

That’s a real problem because it violates a law titled “Prohibition on executive branch influence over taxpayer audits and other investigations,” which, the judge notes, “states: It shall be unlawful for any applicable person to request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer…The explicit text of this statute prohibits President Trump and his lawyers—one of whom was former White House Counsel—from asking for or promoting termination of an audit directed toward him.”

Trump v. IRS is starting to look like a case of “be careful what you ask for.” Not all judges in the Southern District of Florida are Aileen Cannon, and Judge Williams has combed through the record in detail to determine, factually and legally, what the outcome should be in this matter.

So the judge concludes that there was never jurisdiction for a court to hear this case because the parties interests never diverted. “Whether Executive Branch actors can privately agree to give themselves and their former clients blanket immunities and billions of dollars in tax monies for legally undefined grievances was never an issue advanced to this Court. The question is whether the Parties could do so by claiming to be adverse and engaging the legitimacy of a court proceeding. The answer is a resounding ‘no’: the Lead Plaintiff and the Government are one, a fully realized unitary interest. Because ‘Plaintiffs have no answer for the fact that the [L]ead Plaintiff, President Trump, directs and controls the Defendants[.]’”

Rule 11. You may recall that we anticipated this argument when we initially discussed this case. The judge notes she can consider Rule 11, even after the case is closed, without a request from any party. The Rule provides a remedy against litigants who engage in frivolous behavior and the judge notes, “when an attorney files a pleading in federal court, he certifies that, among other things, the pleading is not being presented for an improper purpose.” Filing a lawsuit just to extract a settlement is an improper purpose. The court can use “appropriate” sanctions against a party who has “abused” the judicial process.

One example, in the Eleventh Circuit, of a situation where Rule 11 sanctions are appropriate is a case filed “in bad faith for an improper purpose.” Here we have such a case. “Certainly, a court should not be a forum for a party that cynically views a lawsuit as a vehicle to achieve a predetermined outcome: ‘I’m suing myself,’” the judge writes. “I’m suing myself” is a comment Donald Trump made, as she notes in footnote 61.

That leads the judge to consider what sanctions are appropriate here. “District courts have broad discretion to tailor appropriate and reasonable sanctions under Rule 11,” she concludes, and “A court may impose both monetary and non-monetary sanctions.” She concludes that in this situation, the most important consideration for her is that Rule 11 is intended to deter future misconduct. With that north star set, she gets to work:

• She refers Trump’s lawyer, Alejandro Brito, to the Florida State Bar for disciplinary proceedings.

• As to another of the president’s lawyers, who is not a member of the Florida Bar, Daniel Z. Epstein, she denies him “pro hac vice” status, which permits out of state lawyers to participate in a specific case in a court other than one that license them. in the Southern District of Florida for one year.

• Then there is a provision that applies to the Trump litigants themselves: They can’t use the supposed settlement agreement. They can’t use it to keep the government from investigating or charging them, or doing anything else.

In considering her inherent authority to sanction the Trump plaintiffs, the judge writes, “In abdicating its responsibility to zealously defend the interests of the United States, the Government entered into a ‘settlement’ that deviated from its litigation posture in similar actions, disregarded DOJ policies, and accomplished objectives beyond those authorized, as well as those specifically prohibited, by law. Under these circumstances, the Court may reasonably infer that the Government failed to defend this lawsuit or to respond to the Court’s jurisdictional inquiry because its position would not withstand judicial scrutiny and because resolution of the threshold issues identified by the Court would not have favored its preferred outcome to this case.”

The judge concludes that the plaintiffs, including the sitting president of the United States, “acted in bad faith,” using the court to try and “confer[] legitimacy upon a course of action that they were unwilling to subject to judicial review”—the plan to set up a slush fund and relieve Trump and his family of any responsibility for back taxes or forward-facing investigation. That justifies monetary penalties, and she writes that the retired judges who sought to intervene may seek reimbursement for their legal fees. Then, the judge lowers the boom:

“Finally, the Clerk of Court is DIRECTED to mail a copy of this Order to the State Bar of New York, of which Acting Attorney General Blanche is a member (No. 4192456), AND to the District of Columbia Bar, of which Associate Attorney General Woodward is a member (No. 997320), where disciplinary proceedings are currently ongoing.” She notes in footnote 70 that “Ethics complaints have been filed in New York and the District of Colombia against Acting Attorney General Blanche and Associate Attorney General Woodward.” She wants those state bars to know what she has concluded here. That’s a powerful statement coming from a federal judge.

Trump can, and almost certainly will, appeal to the Eleventh Circuit Court of Appeals. That’s why the Judge has gone to pains to try and write an airtight opinion. She concludes in the same vein. “The Court,” she writes—and while that could be a reference to herself, it is almost certainly a guidepost for appellate courts as well—“need only look to the uncontroverted facts here:

1. Donald Trump is President.

2. President Trump controls the actions of the Secretary of the Treasury Department Scott Bessent, IRS CEO Frank Bisignano, and all Executive Branch actors.

3. President Trump, through Executive Order § 7, also controls the litigation strategy and interpretation of the laws guiding the Department of Justice…

4. For the 109 days that this case was pending, no attorney representing the United States filed a notice of appearance or any document indicating the government’s position, interest, or awareness of this matter.

5. Defendants’ actions are consonant with the dictates of Executive Order § 7.

Because there was never a proper case before the court, there was nothing to settle.”

“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.”

Judge Williams declines to aid Donald Trump in his scheme to take the taxpayers’ money for himself. “Ensuring that our courts are used only for the express purpose created by the Constitution is the obligation of every judge and an obligation that this Court must discharge in light of the matter before it.”

Like so many district judges before her, Judge Williams has done her job by examining the law and the facts and doing justice.

The courts can only protect the rule of law if the public pays close attention to what happens inside them. That’s what we do here every day: read the opinions, follow the facts, and explain what they mean without the spin. If you find value in that work and want to help make it possible for everyone to keep reading, I hope you’ll join our community of paid subscribers.

We’re in this together,

Joyce