Federal U.S. District Judge Kathleen M. Williams in Florida on May 29 ordered lawyers for President Donald Trump and his family to respond to “grievous allegations” that an unusual deal to end Trump’s $10 billion lawsuit against the Internal Revenue Service in return for setting up a $1.6 billion compensation fund, may have been an act of fraud. She asked his lawyers to explain why the controversial agreement was appropriate to resolve the case.
Meanwhile, President Trump’s fellow senior Republicans urged Trump to drop his self-serving scheme to establish a $1.8 billion “compensation fund” for the benefit of him and his allies, and held an acrimonious meeting with the Acting U.S. Attorney General on this matter.
The background to the possibility of fraud is this. On January 29, 2026, Donald Trump, along with his sons and The Trump Organization, sued the IRS for $10 billion in damages, alleging that the IRS and Treasury Department failed to safeguard their tax records from a former contractor who got hold of them and in 2019 made unauthorized disclosures of the records.
This was followed on May 18, 2026, by Donald Trump and the Justice Department announcing the establishment of a $1.8 billion “Anti-Weaponization Fund.” Trump reported that as part of a settlement agreement between him and his family and the U.S. Justice Department, President Trump would drop the $10 billion lawsuit against the IRS; and in return, the new fund would provide monetary compensation to individuals, including Trump, who claim they were targeted or persecuted by partisan Federal investigations.
Opponents of the deal claim that Trump and his allies would benefit.
Judge Williams’s May 29 order, the May 31 Washington Post reports, “was prompted by a filing in the case brought by a group of retired judges who raised significant concerns about the Fund’s creation. They claimed that Trump and the Federal government deceived the court by failing to disclose the terms of their settlement, and asked Williams, who was overseeing the case, to reopen it.”
The retired judges alleged that “[T]he purported ‘settlement’ that the parties never placed before this Court, raises profound questions about the parties’ candor toward the Court and manipulation of the judicial system, which threatens to undermine confidence in the administration of justice.”
Further, the former judges asked the court to utilize a rule that would allow Williams to set aside the judgment and reopen the case for a “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.”
Finally Judge Williams herself in her May 29 order suggested that Trump’s original lawsuit of $10 billion may have been a “frivolous lawsuit,” that he raised and then dropped to establish the $1.8 billion settlement. Willaims wrote that the court may impose sanctions if a claim is filed for an ‘improper purpose’…. A party’s decision to file a frivolous lawsuit for the sole purpose of forcing a settlement may qualify as such an improper purpose.”
Williams asked Trump and his lawyers to respond to the allegations raised by the group of judges by June 12.
Meanwhile, the May 29 Wall Street Journal, in an article, “Trump’s $1.8 Billion Settlement Fund Sparks Alarm Inside White House” reported that “more than a dozen Republican Senators have privately urged top Trump aides to drop the fund.”
The Journal reports that “Senate Republicans pressed acting Attorney General Tod Blanche on the fund at a contentious meeting last week that Sen. Ted Cruz (R., Texas) referred to as one of the roughest in his years in the Senate.”
