Trump Sued Himself, Settled With Himself, and Used Your Money to Pay Terrorists

Let's walk through what actually happened, step by step, because when you lay it out plainly it sounds like something from a failed state — not the United States.

Step 1: The frivolous lawsuit

In his first term, an IRS employee illegally leaked Trump's tax returns to the press. That employee was caught, prosecuted, and sentenced. The system worked. The crime was punished.

Trump filed a $10 billion lawsuit against the IRS anyway. Ten billion. For context, the entire annual budget of the IRS is about $12 billion. Trump wanted damages roughly equal to the agency's entire operating budget — for a leak by a single employee who was already in prison.

No serious legal observer gave this lawsuit a chance. It was a political prop — something to wave around at rallies. "I'm suing the IRS for TEN BILLION DOLLARS." The crowd cheers. The case sits in a drawer.

Then Trump became president again. And suddenly, the man on one side of the lawsuit was also the man who controls the other side.

Step 2: The "settlement"

On May 19, 2026, Trump's Justice Department — run by his former personal defense attorney, Todd Blanche — announced a settlement. Trump would drop the $10 billion lawsuit. In exchange, the DOJ would create a $1.776 billion "Anti-Weaponization Fund."

Let's be precise about what happened here. The plaintiff is Donald Trump. The defendant is the U.S. government, which Donald Trump runs. The settlement was negotiated by Todd Blanche, who until recently was Donald Trump's personal lawyer and is now Donald Trump's acting Attorney General. The money comes from the Treasury Department's Judgment Fund — a permanent appropriation that does not require congressional approval.

Trump sued Trump. Trump's lawyer negotiated on both sides. Trump's money — your money — pays the bill. No one in Congress voted on it. No one outside Trump's circle agreed to it.

In any courtroom in America, if an attorney represented both sides of a settlement, it would be thrown out as a fraud on the court. This isn't a legal gray area. It's the kind of thing lawyers get disbarred for. But when the president does it, apparently we call it a "settlement" and move on.

Step 3: The slush fund

The $1.776 billion fund — branded with a cutesy patriotic number, because even the grift needs a marketing department — has the following features:

• A five-member commission decides who gets paid
• Trump can fire any commissioner without cause
• There is no obligation to disclose procedures, criteria, or recipients
• It bypasses Congress entirely — funded from Treasury without a vote
• Eligible recipients include "entities associated with President Trump himself"

Read that list again. A fund with no oversight, no transparency, no congressional authorization, controlled by people who serve at the president's pleasure, that can pay money directly to the president's own entities. In any other context, this would be called what it is: embezzlement.

Step 4: The tax immunity

The day after the settlement was announced, Blanche quietly signed a one-page addendum. This addendum had nothing to do with "weaponization." It declared that the IRS is "FOREVER BARRED and PRECLUDED" from auditing Trump, his family, his trusts, his companies, or his affiliates on any tax return filed before the settlement date.

The New York Times had reported that a long-running IRS audit of Trump could result in a bill exceeding $100 million. That audit is now erased. Gone. Trump's former personal lawyer, using the authority of an office Trump gave him, signed away the government's right to collect what the president owes.

Federal law — 26 U.S.C. § 7602 — gives the IRS independent authority to examine any return. The Attorney General does not have the power to waive it. A separate criminal statute prohibits the president from ordering audits stopped. Both laws were violated by a single page of paper signed by one man who owes his job to the person it benefits.

This isn't a legal settlement. This is a president using the Justice Department to write himself a get-out-of-taxes-free card.

Step 5: Who gets the money

Now we arrive at the part that should make your blood run cold.

The fund's eligible recipients include nearly 1,600 January 6 defendants — the same people Trump already pardoned. The Proud Boys. The Oath Keepers. People convicted of seditious conspiracy — the legal term for attempting to overthrow the government by force. People who beat 140 police officers with flagpoles, fire extinguishers, and their fists. People who built a gallows on the Capitol lawn. People who smeared feces on the walls of the building where the Constitution is kept.

They were pardoned. Now they may be paid. With your money.

Let's call this what it is. When a government uses public funds to compensate people who committed politically motivated violence on behalf of the head of state, that is state-sponsored terrorism financing. It does not matter that the violence happened in the past. The message is forward-looking: act violently on the president's behalf, and you will be pardoned and paid. That is the textbook definition of incentivizing political violence with state resources.

The officers' lawsuit puts it plainly: "Militias like the Proud Boys will use money from the fund to arm and equip themselves." The men who were beaten defending the Capitol understand what this fund is. It is not restitution. It is not justice. It is a war chest for domestic terrorists, funded by the people they attacked.

The reaction tells the story

When even Republican senators call your fund "a payout pot for punks" and "a galactic blunder" — when your own Senate Majority Leader says you didn't bother to consult him — when a two-hour meeting with your acting AG is described as "a shitshow" by members of your own party — when the backlash is so severe that it torpedoes your own $72 billion immigration bill, your top legislative priority — the thing you built your entire political identity around — that tells you something.

It tells you this was so flagrant that even people who have spent two years defending everything Trump does couldn't stomach it. Not because they suddenly grew a conscience. Because the optics of paying the people who beat cops with flagpoles were so radioactive that even unconditional Trump loyalists had to protect themselves.

The full picture

Zoom out and see all the pieces together:

1. Trump filed a frivolous $10 billion lawsuit against his own government
2. His former personal lawyer, now acting AG, "settled" it
3. The settlement created a $1.776 billion secret fund with no oversight that can pay Trump's allies — and Trump himself
4. A quiet addendum granted Trump and his entire family permanent immunity from tax audits, erasing a potential $100M+ bill
5. The fund's most likely recipients are convicted domestic terrorists Trump already pardoned
6. The money comes from Treasury without a congressional vote
7. The two police officers who were beaten on Jan. 6 had to sue to try to stop it
8. The backlash from his own party killed his top legislative priority

Every element of this — every single one — would be a standalone scandal in any previous administration. Together, they describe something that has no precedent in American history: a sitting president using the justice system to launder taxpayer money to himself and his foot soldiers, while simultaneously granting himself immunity from the tax system, with no legislative check, no judicial review, and no transparency.

A House Democrat called it "the largest single act of grand larceny in American history." That might be underselling it. Grand larceny is just theft. This is theft plus terrorism financing plus obstruction of the tax system plus abuse of the settlement process plus a constitutional violation of the 14th Amendment's ban on paying debts incurred in aid of insurrection.

And the man who did it is sleeping in the White House tonight.

What comes next

The officers' lawsuit invokes the 14th Amendment — written by men who had just fought a civil war and knew that future governments might try to reward those who attacked the republic. The question before the court is whether the Constitution's explicit prohibition on paying insurrectionists means anything when the president is the one paying them.

If the answer is no — if a president can sue himself, settle with himself, create a secret fund, grant himself tax immunity, and use public money to pay the people who stormed the Capitol, all without a single congressional vote or judicial check — then the word "republic" no longer describes what we have. It describes what we had.