NOTE TO READERS: The following story is the second of two developments Friday on the legal controversy over the new Trump “slush fund.” The earlier development is reported in the post just below this one.
Trump lawyers and new fund in trouble?
A federal judge in Florida on Friday ordered lawyers for President Trump and for government agencies to answer “grievous” claims that they engaged in deception and fraud in arrangements that led to creation of a new $1.8 billion plan for federal handouts to Trum’s followers and friends.
If the judge does rule that the attorneys engaged in wrongdoing, the judge could undo all of those arrangements and shut down that deeply controversial funding plan. The new order by U.S. District Judge Katheen M. Williams of Miami was the second court action Friday to threaten the end of that plan. A federal judge in Virginia raised the same potential result.
Judge Williams’s order also creates the prospect of professional punishment for the Trump legal team, if she rules against them: they could face formal sanctions ranging from financial penalties to suspension of their law licenses or even to the loss of their license to continue practicing. Those are within the judge’s power under so-called Rule 11 of the set of rules governing the operation of federal courts.
The development in Florida was the latest in the legal saga surrounding the case of Trump v. Internal Revenue Service, filed in January with Trump, his two sons and the family business seeking $10 billion for the harms that they contend were done to them when their tax records at IRS were illegally released and made public.
Before IRS or its parent, the Treasury Department, filed any response to that lawsuit (although they have objected to similar claims in other cases), lawyers settled that case out of court. They did not tell Judge Williams of the plan they were preparing on the payouts of Treasury money.
After the case was closed, Administration officials used the settlement as the legal basis for creating the new plan for payments to people or organizations who believe they had been wronged legally during the Biden Administration. The settlement also gave the Trumps an exceedingly broad personal and corporate immunity to any claims that might be made against them by the government.
Several lawsuits have now been filed in federal court to stop that plan. In Judge Williams’ court, after she had closed the Trump v. IRS case because of the settlement, a group of 35 retired judges urged her to reopen the case and explore what they charged were manipulations of the court system, amounting to fraud and deception.
Within a day after those judges filed their plea, the judge acted. She has not yet formally reopened the case, but she did order the Trumps and their main business organization to answer the retired judges’ claims. By June 12, the judge said, new filings must reply to:
· “The charges of collusion” and whether the two sides in the Trump lawsuit were actually engaged in a real legal controversy as adversaries (that must be the situation in order to have a case proceed in federal court).
· The claim that the joint decision to dismiss the Trump lawsuit “was premised on deception” by the Trumps and the federal agencies involved.
· Should that case be reopened formally because the court was “the victim of a fraud.”
The retired judges were given the option of replying to those filings; if they do so, they can file by June 19. There seems to be little doubt that they will reply to the Trump filings; they have expressed a keen interest in protecting the integrity of the courts.
Judge Williams’ order was based upon a different court rule than the one that the retired judges had invoked in their criticism of what had happened in the lawsuit and since. They suggested that the judge already had the power to reopen the case under Rule 60, which deals with clearing up a mistake in a court case after it was closed.
Judge Williams based her entire order on Rule 11, the provision that forbids licensed attorneys to file “frivolous” lawsuits – that is, claims that have no legal reality to them. The judge apparently plans to wait to decide whether to reopen the case officially, until after her question on that point is answered. Her order did cite her power “to investigate serious misconduct as an issue” under Rule 11.
She also wrote that a “decision to file a frivolous lawsuit for the sole purpose of forcing a settlement may qualify as an improper purpose” under that rule.
Her three-page opinion recited several of the details of the criticisms that had been made by the retired judges.
