The Trump administration's $1.776 billion compensation fund for alleged 'victims' of 'weaponization' appears to violate a mandate set out by ousted Attorney General Pam Bondi last year, according to legal experts.
Bondi's Directive and the Fund
In February 2025, Bondi issued a memo titled 'Reinstating the Prohibitions on Improper Third Party Settlements.' It stated that the Justice Department should not use settlements 'to require payments to nongovernmental, third-party organizations that were neither victims nor parties to the lawsuits,' except in limited circumstances. However, the new fund is structured to steer a large pot of money to third-party claimants, most of whom have not filed suits and may never do so.
Former Justice Department officials have pointed out this contradiction. Jennifer Ricketts, who worked at the department's civil division, told The New York Times: 'I've just never seen litigation risk outside the four corners of the complaint being used as justification for something in a totally unrelated lawsuit.'
Recipients and Secrecy
Recipients of the fund, announced by Acting Attorney General Todd Blanche last week as part of a settlement after President Donald Trump abandoned his $10 billion lawsuit against the IRS, will likely remain a secret. Blanche stated that Trump and his family are not eligible, but the president's donors, allies, and supporters have not been ruled out.
Blanche, like Bondi a former Trump personal attorney, defended the fund as 'unusual' but 'not unprecedented,' citing an Obama-era compensation fund for Native American farmers. Trump's agreement applies only to existing audits and could spare the president and his family from a more than $100 million tax penalty.
Legal Experts Condemn the Move
UC Berkeley Law professor Brian Galle, a former federal prosecutor with the Justice Department's Tax Division, told The Independent: 'There is a federal crime that prohibits exactly what the president did, and for exactly this reason, to prevent a corrupt president from using the IRS to their own advantage. This is an episode that would have brought down any other presidency in American history.'
Trump said Wednesday he was not involved in the settlement. 'I guess they made a settlement of some kind. I wasn't involved in the settlement, I could have been involved, but I didn't choose to be, so they made a settlement,' he told reporters.
