Trump’s $1.776 billion ‘anti-weaponization’ fund leaves legal firestorm at feet of lawmakers

Rebecca BeitschSun, May 24, 2026 at 10:00 AM UTC

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Legal experts say President Trump’s new $1.776 billion “anti-weaponization” fund is rife with legal and ethical issues that only Congress is likely to be able to address.

Trump and the Department of Justice (DOJ) set off a firestorm when they pushed to voluntarily dismiss a lawsuit from the president seeking $10 billion over the leaking of his tax returns, announcing they would instead create a fund to offer payouts to those who claim they have been wronged by the government.

The next day, acting Attorney General Todd Blanche signed a memo blocking the IRS from taking any action against Trump with regard to his past tax returns, a move that comes after years of scrutiny around whether the president dodged tax payments up to $100 million.

“The incredibly collusive nature of the settlement makes it problematic and should be of concern to every American,” said Rupa Bhattacharyya, who reviewed settlement requests in her prior role as director of the Torts Branch of the DOJ’s Civil Division and also oversaw the September 11th Victim Compensation Fund.

“He is the party that is requesting the settlement, and he is also the party that is making the offer in compromise, and that’s unprecedented,” she said. “It’s just unheard of, and it raises all sorts of concerns about whether or not this is a sham litigation that was filed purely for the purposes of skimming money.”

The arrangement set off a bipartisan firestorm in Congress, which may be better positioned to challenge the fund than the courts — if the House and Senate, both now under GOP control, choose to do so.

“I don’t think the courts are going to be the place to stop this for a variety of reasons,” said Ankush Khardori, a former DOJ trial attorney specializing in major financial fraud.

“Any effort to halt this can and should come from Congress, which can definitively and easily do.”

Democrats offered a bill to block the fund and a bipartisan measure led by Rep. Brian Fitzpatrick (R-Pa.), a former FBI agent, who when asked about the fund, told reporters, “We’re going to try to kill it.”

GOP senators blasted the fund to Blanche directly during a heated meeting on Thursday that was described as “mutinous,” with leaders later announcing they wouldn’t vote to advance the budget reconciliation package over concerns with the fund.

The fund’s creation also sparked litigation from former Capitol Police officers who argued it sends a signal of approval to those who stormed the Capitol, and that “militias like the Proud Boys will use money from the fund to arm and equip themselves.”

Legal issues over the settlement were raised before it was announced, with the judge overseeing the matter questioning Trump and the Justice Department over whether they were truly adversaries — a requirement for bringing cases in court.

“The judge was exactly right. This was a lawsuit that was brought by Trump against his own government,” Khardori said.

“So it has the appearance of being sort of a sham lawsuit. I don’t really have a readily available precedent, because people don’t do things like this.”

Trump on Friday defended the fund, saying he “gave up a lot of money” in a case where he speculated he would have won a “fortune.

“Instead, I am helping others,” he wrote.

Both Khadori and Bhattacharyya said the fund appears to be a misuse of government funds set aside to settle lawsuits, as that money is meant to be used where the U.S. was either found liable or prosecutors determine they face significant legal risk.

It’s unclear whether Trump’s case presented such a scenario. It was likely brought after the statute of limitations ran out and in other cases involving the leaks, the DOJ had argued they could not be held liable for the actions of the government contractor who shared the document.

The New York Times reported last week that the IRS crafted a 25-page memo outlining issues with Trump’s case and recommending the DOJ dismiss it.

“I think the case that Trump filed was very, very weak — unlikely to prevail,” Khardori said.

Bhattacharyya said there are a number of issues with how the fund is structured, noting the DOJ is diverting funds from the existing account used to settle lawsuits to create the new coffer.

“There’s no congressional authorization for the expenditure of these funds for the purpose for which the president and the attorney general are saying it’s going to be spent, and that I think may be illegal,” she said.

She also noted the DOJ has set out zero guidelines on who can receive the funds — something Blanche told lawmakers it would be up to the appointees he selects for a five-person commission to determine.

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“The complete lack of any identified criteria for how they’re going to determine eligibility, how they’re going to determine how much compensation, how they’re going to determine who was injured and in what way is entirely unprecedented. Every other fund that I’ve ever been involved in — and I’ve been involved in at least four — they were all set up by Congress, and the laws in each case establish those sorts of guidelines,” she said.

“With this amount of taxpayer money at stake, that should really raise concerns.”

Khardori also raised concerns over who Blanche might appoint to the commission.

“There are no standards that they’ve created, so it’s just literally they could just appoint a bunch of people who are sympathetic to Trump, election deniers — Ed Martin types,” he said, referencing the now-U.S. pardon attorney who was pulled from consideration for a U.S. attorney role after lawmakers, including Sen. Thom Tillis (R-N.C.), raised concerns over his representation of Jan. 6, 2021, rioters.

“This is not hypothetical, right? These people have already been put into high positions in government, and some of them, like Martin, only lost them because they required Senate confirmation,” Khardori added. “So, you could have a bunch of hacks appointed to this commission.”

The new fund is set to stop processing claims just before Trump leaves office, and the memo establishing it also says the government cannot be held liable for “any other fraud or misuse of the funds.”

“The next administration, if it’s a Democrat, is going to do everything they can to claw this money back, to publicize who the recipients were, to review the applications, and you better believe that if some of these people — if the fund goes through — successfully apply for funds and misrepresented the nature of the facts underlying their cases to the government, there will absolutely be people — like me — who say that those people should be prosecuted during the next administration because they lied and defrauded the government,” Khardori said.

“This is not a get out of jail free [card] or free for all.”

Bhattacharyya said it is “completely unheard of” for the government to waive off future concerns over fraud, but she added that as a practical matter, once money is distributed it is difficult to get back.

“It’s clear that they’re trying to get all this money out the door, because once it’s out the door, no matter what authority anybody has, it’s really hard to get it back,” she said.

“If the court later finds that this violates some law or was illegally set up or claims were fraudulent, or whatever, it is going to be very, very difficult to recoup that loss on behalf of the American taxpayer.”

Beyond the fund, experts also see issues with Blanche’s second memo that “forever barred and precluded” the IRS from pursuing certain claims against Trump, his family, and their businesses.

Bhattacharyya said while it is true the DOJ usually signs waivers like that after a settlement, “those waivers are generally sort of limited to claims that were or could have been brought in this lawsuit.”

“This lawsuit was only about the disclosure of taxpayer information, it was not about whether or not the Trump family or his businesses or he in his personal capacity violated the tax laws, and so to waive all of those claims as well, that’s the part that’s unprecedented. It’s how broad the waiver is,” she said.

Khardori described that memo as “effectively a self-pardon” for Trump on his past tax dealings.

“I understand everybody’s angry, and they’re right that it is corrupt and self-dealing — but it just reminds me again that the Biden administration screwed this up royally and historically,” he said.

“This immunity thing would not have been possible if the federal government, the Justice Department, had done the right thing, investigated Trump and his finances during the Biden administration, and prosecuted them. That would be appropriate,” he argued.

None of the bills introduced that seek to stymy the fund addresses the second memo signed by Blanche immunizing Trump from further IRS scrutiny — a dynamic likely beyond their authority as it does not touch on Congress’s power of the purse.

But the fund itself appears to be a rare area of bipartisan agreement in both the House and Senate, a critical environment for advancing legislation.

“I truly believe that the courts are not going to get us out of this one. This is one where Congress needs to step up and do its job and protect its constitutional power of the purse, so that this kind of thing doesn’t happen,” Bhattacharyya said.

“This should not be allowed to go forward, but I think it’s Congress that’s going to have to fix it,” she added.

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