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Judge: Trump sought to ‘manipulate the judicial process’ with his IRS lawsuit and attempted $1.8B fund

By CNN

(CNN) — A federal judge on Monday said a controversial lawsuit brought by President Donald Trump against the IRS sought to “manipulate the judicial process” and that he acted in bad faith in bringing it.

US District Judge Kathleen Williams is ordering sanctions for the attorneys involved in the lawsuit, which led to an attempt to create the now-defunct $1.8 billion “anti-weaponization” fund for allies of the president. It was also used to justify a Trump administration order giving the president and his businesses amnesty for any past tax issues.

Williams’ 56-page opinion blasted the behavior of both the Justice Department — arguing that the administration’s response to the case disregarded DOJ policies and potentially the law — and of the private attorneys who brought the lawsuit on Trump’s behalf.

“The nature of the suit itself and the conduct of the Parties and counsel from its filing make plain that this was an attempt to use the Court to provide some legitimacy to an agreement to confer immunity to people and entities affiliated with the President and to earmark billions of dollars from American taxpayers to redress grievances not defined in the law,” the judge wrote.

She ordered that her opinion be submitted to attorney disciplinary boards in in New York and Washington, DC, that are reviewing preexisting professional ethics complaints against acting Attorney General Todd Blanche and Associate Attorney General Stanley Woodward.

“In abdicating its responsibility to zealously defend the interests of the United States, the Government entered into a ‘settlement’ that deviated from its litigation posture in similar actions, disregarded DOJ policies, and accomplished objectives beyond those authorized, as well as those specifically prohibited, by law,” Williams wrote.

The judge also referred one of the private attorneys who represented Trump in the case to the Florida Bar for potential disciplinary proceedings and blocked another lawyer who represented Trump from court appearances in the Southern District of Florida for the next year.

Williams’ opinion came in response to a request from a group of retired judges, filed after she dismissed the lawsuit, that she scrutinize the deal. The new order from Williams — who was appointed by President Barack Obama — indicates the retired judges could be entitled to having their legal fees covered.

Attorneys for the former judges called Monday’s opinion a “resounding victory for the rule of law.”

CNN has reached out to the Justice Department for comment.

A spokesman for Trump’s private legal team said: “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. President Trump continues to hold those who wrong America and Americans accountable.”

The settlement between the IRS and Trump this year stemmed from a significant leak of tax information on thousands of wealthy individuals, including Trump, by a government contractor six years ago.

The man, Charles Littlejohn, was charged in 2023 with leaking the tax information to media outlets during his time working with a consulting firm with IRS contracts. He pleaded guilty in 2024 and was sentenced to five years in prison.

Trump’s Justice Department announced in May it reached a settlement with the president over the leaked information that included a $1.776 billion fund for those who believed they had been unfairly targeted by the DOJ.

Amid significant backlash from Republicans and Democrats, Blanche told lawmakers last month the fund was dead, but he has refused a federal judge’s request to submit a signed statement saying the fund was no more.

More importantly for Trump, the settlement included a memorandum from Blanche — quietly added to the Justice Department’s announcement of the settlement the following day — prohibiting the IRS from investigating Trump, his family or his businesses for past tax issues, or even other types of claims brought by the federal government for any conduct pre-dating the deal.

Even before Williams’ Monday opinion, it was unlikely that the Blanche amnesty order would have stopped a future Democratic administration from investigating Trump, given the dubious legal ground around the agreement.

But the new order from the judge could undermine any attempt by Trump to use the purported settlement as a defense in court, if a future administration brings a claim against him, his family or his businesses.

Singling out top Trump appointees at DOJ

Williams wrote at length about the Justice Department’s approach to the lawsuit — and how it “remained conspicuously absent and silent when serious questions about this matter have been raised” — to explain why she concluded it was not a legitimate legal dispute.

But she also hinted that Blanche and Woodward specifically may have violated attorney ethics laws, while signing on to a deal that the judge believes to be unlawful.

She suggested the two Justice Department officials should have recused themselves from working on the dispute, because of their work when they were private attorneys representing clients who stood to benefit from the case’s resolution.

Blanche was Trump’s attorney in various criminal cases before the president’s return to the White House, while Woodward represented Capitol riot defendants and a Trump aide who was prosecuted alongside the president in the classified documents case.

The anti-weaponization fund was “premised” on paying out claims from January 6, 2021, and the classified documents case, the judge noted Monday.

“Instead of either recusing because of their previous representations or vigorously defending this lawsuit as required to do so by DOJ policies and procedures, these lawyers agreed to a ‘settlement’ involving a staggering amount of money potentially benefitting former clients,” Williams wrote.

The judge additionally said the second piece of the “settlement” — the tax amnesty order signed by Blanche alone — “directly contravenes” a federal law barring presidents and other executive branch leaders from influencing tax audits.

Williams said the “acquiescing to any such demand is wholly incompatible with the duties of DOJ attorneys (as well as CEO [Frank] Bisignano for the IRS) to enforce the law and protect the public interest,” raising the prospect that the order is unconstitutional as well.

The opinion comes as Blanche is scheduled to appear before the Senate Judiciary Committee on Wednesday for a confirmation hearing to be the permanent head of the DOJ. Williams wrote in a footnote that she was “extremely troubled” by testimony Blanche gave when he was on the Hill in May, when he said the court had no role in reviewing the agreement.

“While temporally accurate, this answer is, at best, misleading and, at worst, disingenuous,” she wrote.

This story has been updated with additional details.

The-CNN-Wire
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A Los Angeles neighborhood was terrorized by a raging warehouse inferno. Now it’s tormented by the suffocating stench

By CNN
Los Angeles (CNN) — For eight brutal days, residents of Boyle Heights watched smoke billow from a burning warehouse and prayed the flames would spare their homes.There was no escaping the black pollution that choked the neighborhood then, and no reprieve now, even five weeks after the fire was extinguished. The smell of burning plastic has been replaced by something else: the pungent odor of rotting food, and everything that comes with it.The inescapable stench – equal parts sour and cloying – has settled like a thick haze over the neighborhood, baked by the Southern California heat.Boyle Heights locals say the stink is making them physically sick, and that swarms of flies and giant rats have followed the noxious odor into their neighborhood.When it went up in flames in mid-June, the warehouse contained 88 million pounds of frozen food, some of which burned in the blaze and some liquified. That amount of waste would fill roughly 440,000 curbside trash bins. Lined up wheel-to-wheel, they would stretch more than 200 miles, roughly the distance between Washington, DC and New York City.Now, cleanup crews are racing against the clock to remove what the fire left behind, including waste so toxic it needs to be sealed in hazmat containers. The City of Los Angeles has directed Lineage Logistics, the largest owner of cold-storage facilities in the world and operator of the repository, to clear the waste by August 13 — a timeline one company executive called “very aggressive” at a town hall last month.When the wind shifts, the smells from the warehouse waft miles away, even weeks after the fire was extinguished.But in Boyle Heights, the putrid scent of fermented food is a fetid constant. It lingers in the air and coats the mouth. 90% of residents in the predominantly Latino neighborhood said they noticed constant odors in a recently released county public health survey.In an effort to stymie the foul smell, part of the facility is wrapped in plastic sheeting while large fans spray odor-control mist around the warehouse. The food waste is sprayed with bleach, deodorizer and water before it’s covered and hauled to a landfill in Riverside County, east of Los Angeles.The near-tangible odor has infiltrated every corner of Alicia Naranjo’s home, which is six houses down from the warehouse. At first, the smell permeated the bedrooms, bringing with it sleepless nights. Then came anxiety and trouble breathing, followed by headaches, congestion, coughing and throat pain, she said in a raspy voice she attributes to the pollution in the air.“And then,” her sister Elsa Naranjo chimed in, “we got infested with rats.”“You see them jumping around from the walls,” she said. “Outside our house, in our property.”Rat traps, black plastic boxes with holes in the side, can be seen almost every ten feet along the ground, usually sitting underneath a hanging fly trap filled with dark clusters of dead and drowning flies.There’s one right outside Lisset Navarrete’s house, but she’s not convinced they’re effective for one main reason: the rats she’s seen are bigger than the traps laid for them.Navarrete said her physical symptoms began with pressure on her chest that moved to her stomach. She said the rotting scent permeates so much of daily life she loses her appetite. Her mother-in-law also fell ill while waiting in line at a nearby clinic, she said.“She just started throwing up, feeling dizzy,” Navarrete said, as she swatted a fly off her arm. “It’s just catching up to us.”Her family can’t turn on the air conditioning without it sucking in the odor, but on a 90-degree day, the aggressive Los Angeles sun only serves to thicken the stench enveloping the neighborhood.Lineage has helped to distribute almost 600 air purifiers and over 650 air conditioning units to households in the immediate neighborhood, a spokesperson told CNN. The company has also offered assistance for temporary relocation, utility bills and pest-control supplies.“Community support efforts to date total more than $3.3 million,” the spokesperson said in a statement.The City of Los Angeles has also pitched in to relief efforts, with Mayor Karen Bass declaring a state of emergency and sending mobile health care clinics to the neighborhood.“No company chooses to experience a catastrophic fire. But every company chooses how it responds,” Bass said in an open letter to shareholders. “Unfortunately, Lineage’s response has fallen short.”The smell of rotting food follows Juan Canil like a second shadow. Even when he leaves his home in Boyle Heights, it’s waiting for him at his auto shop located directly across from the Lineage warehouse.He described the same symptoms as the others: headaches, nausea, discomfort. But the stench is also seeping into his pocketbook. The strong smell and remediation work has continued to stall business for the auto shop owner.“Since the street is closed, I’ve lost a lot of work,” he said. “A lot of money.”As of Thursday, over 4,200 complaints about the odor have been reported to the air pollution regulatory agency, South Coast Air Quality Management District. The agency issued Lineage public nuisance violations for 25 days in a row.The regulators sent Lineage a letter last month, demanding additional odor control measures. In its response, the company said it had already implemented some of the measures and agreed to implement others but argued some AQMD demands would add “several months” to cleanup and worsen the odors.A Lineage spokesperson said the company’s top priority is completing the cleanup quickly and safely and it plans to rebuild the warehouse.With a pivotal election looming this fall, Bass has turned up the pressure on Lineage, directing city agencies to block the company’s plans.“The application is for a permit to repair the damage from the fire, which was not caused by the cold storage operations at the facility. This is normal course in the repair process and will not impact or distract us from the important work of cleanup,” the Lineage spokesperson said.Cold storage facilities are “critical infrastructure,” Lineage said. “Communities around the region have depended on them for over 100 years.”Boyle Heights is not the first time Lineage has faced allegations of community harm after a warehouse fire. Nearly 1,000 miles north of Los Angeles, legal action has already been taken against the company for its response to a different blaze.A Lineage Logistics warehouse caught fire in the small town of Finley, Washington, in 2024. It burned for nearly two months, more than six times longer than in Boyle Heights. Lineage believes the California fire began when solar panel contractors were working on the roof, while the Washington fire’s cause is undetermined.Finley residents sued Lineage on June 18 – one day after the Los Angeles fire broke out – alleging the company cut corners on safety and failed to act quickly enough after the catastrophic warehouse fire, allowing toxic smoke and contamination to devastate the community.“We are sympathetic that the Kennewick community faced a fire that was unique in many ways,” a Lineage spokesperson said in a statement. “While we cannot comment on the specifics of ongoing litigation, we vigorously dispute the lawsuit’s characterization of our safety record.”The spokesperson added, “there was no indication Lineage was at fault for the fire.”Residents near the Washington fire reported many of the same ailments now being described in Boyle Heights, including burning eyes, throat irritation, coughing, difficulty breathing, headaches, nausea and dizziness – symptoms attorney Will Sykes said persist for many of his clients today, some two years after that fire first broke out.Lineage reported a $51 million net gain from the Washington fire from insurance payouts, the company noted in a 2025 SEC filing. The company’s webpage dedicated to the fire response has since been taken down.As of Wednesday, Lineage has removed approximately 80% of the food waste from the Boyle Heights warehouse. The company has said the cleanup is complex and requires patience.But for people living around the warehouse, the concern is not just how long the cleanup will take, but how far its effects have already reached: into their homes, their routines and the air they breathe.During hours of public testimony Wednesday, dozens of Boyle Heights residents spoke about how the fire has affected their lives in front of the South Coast AQMD hearing board, which approved an abatement order Thursday requiring Lineage to conduct specific odor mitigation actions.The mayor urged the board to leverage its full enforcement authority to issue the order, including maximum financial fines against Lineage.“Massive headaches have impeded me from living my daily normal life,” Carla Martinez, a local, testified. “It has prevented me from going to work, going to the grocery store for supplies, and just overall daily activities. Being stuck inside with no A/C in this heat is unbearable, not to mention the cost of having the air purifiers running for a semblance of fresh air.”“If the headaches and the heat don’t get you,” she continued, “It’s the putrid smell…”“…the smell of death and decay that’ll get you.”The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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