The United States Justice Department has announced a $1.7bn (£1.3bn) compensation fund for allies of President Donald Trump who claim they were unfairly targeted during investigations under the Biden administration.
The scheme, named the “Anti-Weaponization Fund”, was revealed as part of an agreement made “in exchange” for Trump dropping his $10bn lawsuit against the Internal Revenue Service over the alleged leak of his tax returns, according to the department.
Democrats condemned the deal, calling it a “slush fund” financed by taxpayers and benefiting Trump allies through a federal agency now overseen by his administration.
Under the settlement, the lawsuit’s plaintiffs, including Trump’s sons and the Trump Organization, will receive an apology but no financial compensation, officials said.
However, people pardoned in connection with the 2021 US Capitol riot, along with others who claim they were unfairly targeted by politically motivated federal investigations, will be eligible to apply for payments.
The agreement was reached just days before a 20 May deadline for both sides to argue whether a valid legal dispute still existed, given that Trump now oversees the IRS through his administration.
A spokesperson for Trump’s legal team said the president was “entering into this settlement squarely for the benefit of the American people”.
“He will continue his fight to hold those who wrong America and Americans accountable,” the spokesperson added.
Legal experts appointed by the court had earlier described the case as highly unusual, writing in an amicus brief that “A sitting president seeks monetary damages for alleged harm to his personal interests from an executive agency that he controls.”
They also referenced Trump’s own statements suggesting he effectively directs both the IRS and the Justice Department lawyers involved in the case.
Following the dismissal filed by Trump’s legal team, the Justice Department announced the creation of the Anti-Weaponisation Fund, designed to establish a “systematic process to hear and redress claims of those who suffered under weaponisation and lawfare”.
The fund will be run by a five-member commission, with four members appointed by the Attorney General, and will be allocated $1.776bn for settlements and compensation decisions. A report detailing payments will be submitted to the Attorney General.
Acting Attorney General Todd Blanche said: “The machinery of government should never be weaponised against any American, and it is this Department’s intention to make right the wrongs that were previously done while ensuring this never happens again.”
The agreement has drawn strong criticism. Brandon DeBot, policy director at New York University’s Tax Law Center, described it as a “breathtaking abuse of the tax and legal system.”
More than 90 Democratic lawmakers in the House of Representatives have also moved to challenge the deal.
Maryland Congressman Jamie Raskin said it was a “slush fund for Trump’s “private militia of insurrectionists, rioters, and white supremacists. . . and sycophant accomplices to his election stealing schemes.”
The original lawsuit filed by Trump, his sons and the Trump Organization accused the IRS of failing to prevent the leak of tax information by former contractor Charles Littlejohn.
The leaked data, published ahead of the 2020 US presidential election, formed part of a major New York Times investigation revealing Trump paid just $750 in federal income tax in 2016 and no federal income tax in 10 of the previous 15 years.
Trump later released his tax documents himself in 2022.
Littlejohn pleaded guilty in 2023 to stealing tax records belonging to Trump and thousands of wealthy Americans while working as an IRS contractor, and was sentenced the following year to five years in prison.
