Three cases involve IRS settlement, public-funded ads and Truth Social fees
The Guardian’s Peter Stone reported from Washington on November 15 that Trump’s legal and political efforts to increase his wealth and boost Republican electoral prospects fueled lawsuits in 2026 by nonpartisan groups, prompting federal judges to issue adverse rulings against some of the president’s initiatives.
Several lawsuits were filed in 2026 over three initiatives: reducing potential tax liabilities through a settlement of his $10 billion lawsuit against the Internal Revenue Service over an old leak of his tax information to the New York Times; boosting the Truth Social platform financially by offering big investors early access to his posts; and helping Republicans by using federal funds to pay for ads touting his record in the run-up to the midterm elections, in which Republicans suffered a heavy defeat. The major lawsuits against Trump’s initiatives have been the work of nonpartisan groups including the Democracy Defenders Fund and the Campaign Legal Center.
In response, judges in Florida and New York used strong language to condemn and help nullify some of Trump’s financial arrangements. In Florida, Judge Kathleen Williams of the U.S. District Court rejected a plan backed by the Justice Department to settle Trump’s $10 billion lawsuit against the IRS.
Williams ruled that the deal to set up a $1.8 billion fund to pay alleged victims of political persecution under Joe Biden and give Trump immunity from IRS audits before May 2026 was “premised on deception” and a “fraud against the court.”
In her mid-July opinion, Williams noted that Trump was on both sides of the issue and that the court itself was perhaps “the victim of fraud.” Williams wrote that the plaintiffs initiated the lawsuit “for an improper purpose – to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.” She concluded that the plaintiffs had acted in bad faith by “collusively filing a lawsuit with claims subject to multiple dispositive defenses solely to provide cover for a collusive settlement,” and, citing language from an earlier ruling, that “this case is part of Mr Trump’s pattern of misusing the courts to serve political purposes.” Williams wrote that the plaintiffs “pursued this lawsuit in bad faith for the improper purpose of dishonestly advancing a political narrative.”
The Justice Department dropped the $1.8 billion fund plan after Williams’s ruling and some political blowback from Congress, according to The Guardian. But despite Williams’s legal objections and sharp criticism from Democratic senators, including Elizabeth Warren of Massachusetts, a provision is still in effect providing immunity to Trump, his family and the Trump Organization from investigations and prosecutions of past tax matters by the IRS as compensation over the leak of his tax returns.
Trump’s lawyers said in late July that they would appeal Williams’s order. In late September, the 11th U.S. Circuit Court of Appeals rejected a request from Trump and his lawyers to immediately lift sanctions Williams imposed over the settlement Trump and the Justice Department backed. The appeals court denied a request by two Trump lawyers, Alejandro Brito and Daniel Epstein, to pause sanctions against them over their handling of the $10 billion lawsuit against the IRS, ruling that the lawyers had not demonstrated they would succeed in challenging the finding that they acted in bad faith.
In New York, U.S. District Judge Jennifer Rochon issued two restraining orders in October to stop the use of public funds for campaign-style ads after Campaign Legal Center Action, representing Common Cause, along with Public Integrity Project Action and Democracy Forward, sued. In her second emergency order on October 30, Rochon ruled that three ads could no longer run using government funds on Instagram and two other sites because they were “purely partisan.” The three ads were headlined “$5,000 to Americans,” “Cost of Socialism” and “Every Democrat Voted against No Tax on Tips.” One of the ads echoed Trump’s claim that if Republicans maintained control of Congress, all Americans would receive $5,000.
The Department of Homeland Security spent $20 million in taxpayer dollars on a private ad agency for the airtime, according to Renata O’Donnell, a senior legal counsel with Campaign Legal Center who worked on the case. “The Department of Homeland Security used $20m in taxpayer dollars to pay a private ad agency for airtime for government-created propaganda. This is blatantly illegal,” O’Donnell told The Guardian. She added: “In direct violation of the law, White House staff, whose salaries are paid with taxpayer dollars, were creating propaganda, including ads that promised people $5,000 to vote Republican.”
In a Truth Social post on October 5, shortly before Rochon’s first ruling, Trump defended using government funds for the ads and stated that tapping public funds was “rather standard.” With growing criticism, including from some Republicans, Trump announced he would pay for the ads himself from his political fundraising operation. The Justice Department also tried to forestall the first restraining order by asserting that “the alleged offending conduct will end tomorrow.”
A third challenge remains unresolved. In mid-September, the Democracy Defenders Fund filed a lawsuit with the San Francisco city attorney, the Washington Litigation Group and Platkin LLP against Trump Media and Technology Group, which owns and operates Truth Social. The suit seeks to block a service, dubbed “Trump API,” that offers special early access to Trump’s posts to users who pay a fee as high as $100,000 per month. San Francisco city attorney David Chiu asked the San Francisco Superior Court to bar Trump Media from offering the service or a similar one and to pay monetary damages for violating public trust and the state’s unfair competition law.
“Trump Media created a marketplace that enables insider trading, which Trump directly profits from,” Chiu said in a statement. “This scheme turns the public trust into private profit. It is corruption, plain and simple.”
A Trump Media spokesperson ridiculed the lawsuit when it was filed, charging that “the people of California should outsource their future lawsuits to AI chatbots who, unlike the leftwing activists masquerading as attorneys who filed this lawsuit, will grasp the basic distinction between public and nonpublic information.”
David Ogden, a senior counsel with the Democracy Defenders Fund who has worked on the case, noted that “Congress made clear that the president, like any public servant, shouldn’t be permitted to profiteer off of special access to government information. It’s a violation of the public trust and it’s important that it be stopped.”
Former judges and former Justice Department lawyers said the moves exemplify corruption. Stacey Young, a former Justice Department lawyer who set up Justice Connection last year as a network to defend the department workforce and the rule of law, told The Guardian: “The justice department’s leadership believes it has one chief client: President Trump. They have allowed him to use the department to protect his financial interests, punish his enemies, and reward his friends.” Young added: “Thanks to the efforts of some of the country’s best litigators, the people of the United States are pushing back and standing up for the ideal that we remain a government of laws, not of men.”
Retired federal appeals court judge J. Michael Luttig said: “The courts have recently begun to strike down Trump’s countless schemes of blatant and shameless venality and corruption in the forms of self-enrichment, bribery, and extortion. That is the through-line of these three cases and the numerous other cases to come.” Luttig placed the rulings in a broader trend of federal courts rejecting as unconstitutional major presidential initiatives including tariffs and birthright citizenship.
Luttig’s analysis was underscored by a July lawsuit filed by the Democracy Defenders Fund and a coalition of 35 former judges, including Luttig, to kill a key piece of Trump’s proposed settlement of his $10 billion IRS lawsuit — the $1.8 billion fund that could have helped some January 6 Capitol rioters.
Barbara McQuade, former U.S. attorney for the Eastern District of Michigan, who now teaches law at the University of Michigan, said the rulings reveal Trump’s penchant for personal enrichment. “It seems that Trump has no shame about using his office for personal enrichment. We can’t count on his own conscience, ethics or advisers to check his worst instincts, but the courts have seen through his various schemes, from his slush fund to his use of taxpayer funds for political ads.”