A federal judge issued a sharp rebuke against the Trump administration over the settlement that was intended to establish the anti-weaponization fund.

U.S. District Judge Kathleen Williams said Monday that President Donald Trump had committed self-dealing when he sued the Internal Revenue Service for leaking his tax files and reached a settlement with the agency.

'The facts before this Court demonstrate there was never adverseness between the Parties; there was never a case or controversy.'

Williams said the case "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" in her 56-page ruling.

That settlement was reached in May 2026 after the president agreed to drop his $10 billion lawsuit against the IRS. It set up a $1.776 billion fund that critics said the president would use to benefit and enrich his supporters and political allies.

"In sum, 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," Williams continued.

She accused Trump of "improperly" employing the lawsuit "to justify a particular award in this matter — access to taxpayer funds and exemption from audits and other investigations — which was accomplished by leveraging control over Defendants."

Williams similarly excoriated the Department of Justice for "abdicating its responsibility to zealously defend the interests of the United States" by agreeing to the settlement.

She also pointed to the $1.776 billion figure as evidence that the settlement amount had more to do with branding than it did a "deliberate and thoughtful" account of damages.

A spokesperson for the president's legal team released a statement about the ruling.

"The IRS wrongly allowed a rogue, politically motivated employee to leak private and confidential information about President Trump, his family, and the Trump Organization to the New York Times, ProPublica, and other left-wing news outlets, which was then illegally released to millions of people," the statement reads. "President Trump continues to hold those who wrong America and Americans accountable."

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The ruling is likely to worsen the chances of Attorney General Todd Blanche being approved by the U.S. Senate. He is scheduled to appear at the congressional hearing Thursday.

Williams was appointed by former President Barack Obama.

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