Federal Judge Finds Trump Acted In ‘Bad Faith’ In $10 Billion IRS Lawsuit, Orders Sanctions 42%
By Sarah Lee67%
7/14/2026, 12:19:12 PM
Topics: Donald Trump
BS Summary: This article contains 21 faulty reasoning types, including Framing Effect, Biased Writer Voice, and Appeal to Emotion, with Negativity Bias as the most egregious example at 36.5% saturation with 284 hits. Analysis detected 1,443 faulty-reasoning hits from 779 analyzed words, generating a BS Score of 46.1% and a BS Rank of 42% (9,305 of 15,855 articles). This article is better (less manipulative) than 58.70% of the article peer group.
A federal judge ruled Monday that President Donald Trump acted in "bad faith" when he filed a $10 billion lawsuit against the IRS over the leak of his tax returns, issuing a scathing order that found the suit was designed to manufacture legal cover for a settlement benefiting Trump and his family, and referring one of his attorneys for possible disciplinary action.
<strong>WHAT HAPPENED</strong>
U.S.
District Judge Kathleen Williams, an appointee of President Barack Obama, wrote in a 56-page order that Trump's lawsuit "was brought for an improper purpose — to gain the imprimatur of judicial legitimacy for a 'settlement' that had no viable basis in law or fact."
Trump, his business and two of his adult sons filed the original suit in Miami federal court in January, seeking at least $10 billion in damages over a 2016 leak of his tax returns by a former IRS contractor, Charles Littlejohn, who was charged in 2023 in connection with disclosing the information to news outlets.
Rather than litigate the case, Trump's lawyers withdrew the suit in May, two days before a court filing deadline, and the Justice Department simultaneously announced a settlement creating a $1.776 billion "anti-weaponization fund" intended to compensate people who claimed the federal government had been used against them, along with a provision granting Trump, his family and affiliated businesses effective immunity from IRS audits and investigations for conduct predating the deal.
Williams found that no genuine legal dispute ever existed between the parties, since Trump, as president, effectively controls both the IRS and the Justice Department that would have defended against his own lawsuit.
"The facts before this Court demonstrate 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," she wrote, concluding that Trump and his co-plaintiffs "acted in bad faith."
She singled out the fund's precise dollar figure — a reference to the year 1776 — as evidence the settlement was crafted for messaging rather than any calculation of actual damages, writing that "even the Fund amount... speaks of a 'branding' effort rather than a deliberate and thoughtful calculation of damages."
The order came in response to a brief filed by 35 former federal judges urging Williams to reopen the case after Trump withdrew it; attorneys for the group, Norm Eisen and Matt Platkin, called Monday's ruling "a resounding victory for the rule of law."
Williams referred Trump's attorney in the case, Alejandro Brito, to the Florida Bar for possible disciplinary review, and separately ordered copies of her findings sent to bar associations in New York and Washington, D.C., where Acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward — both of whom signed documents related to the settlement — are already facing disciplinary proceedings over separate allegations.
A spokesman for Trump's legal team defended the underlying lawsuit, saying the IRS had allowed "a rogue, politically-motivated employee" to leak confidential tax information to news outlets and that "President Trump continues to hold those who wrong America and Americans accountable."
The anti-weaponization fund itself was abandoned earlier this year after bipartisan pushback in Congress, including from Republicans concerned it could be used to compensate supporters who participated in the Jan.
6, 2021, Capitol riot.
Blanche told lawmakers last month the fund was dead but has declined a judge's request to submit a signed statement confirming that, and the settlement's separate provision shielding Trump and his family from IRS audits for past conduct remains formally intact despite Monday's ruling.
Blanche is expected to face questions on both issues at a Senate confirmation hearing this week tied to his nomination as attorney general.
<strong>WHY IT MATTERS</strong>
The ruling represents one of the most direct judicial findings to date that a sitting president used the federal court system to manufacture legitimacy for an arrangement benefiting himself and his family, with a judge explicitly concluding that Trump sat on both sides of litigation involving agencies he controls.
The disciplinary referrals for Brito, Blanche and Woodward extend the fallout beyond the settlement itself and into the professional standing of senior administration lawyers, while the surviving audit-immunity provision means the practical consequences of Monday's finding remain unresolved even as the legal rebuke lands.
<strong>WHAT'S NEXT</strong>
Disciplinary reviews are now pending before the Florida Bar for Brito and ongoing proceedings continue against Blanche and Woodward in New York and Washington.
Blanche's Senate confirmation hearing this week is expected to include questions about both the fund's status and the audit-immunity agreement, which has not been formally rescinded despite the fund's abandonment.
Analysis
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