The U.S. Department of Justice announced on Tuesday that it will permanently abandon a $1.776 billion fund created in May as part of a settlement in former President Donald Trump’s lawsuit against the IRS. The move follows a wave of bipartisan criticism and a legal challenge filed by 35 retired federal judges who allege the settlement was a collusive scheme to funnel money to Trump allies and participants in the Jan. 6 Capitol riot.

35 Retired Judges Demand Re‑opening of the $1.776 Billion Settlement

According to the source, a coalition of former judges, led by retired U.S. District Judge Nancy Gertner of Massachusetts, filed a motion urging the court to revisit the settlement that birthed the fund.. The judges argue the agreement amounted to a “fraud on the court,” claiming the government essentially sued itself and created a legal façade for distributing cash to political supporters. Their filing, submitted in early June, cites potential violations of federal law that prohibit a president from interfering with IRS audits.

Acting Attorney General Todd Blanche Confirms Abandonment to Congress

In a briefing before the House Judiciary Committee, Acting Attorney General Todd Blanche told lawmakers that the DOJ would not move forward with the fund, despite having announced it only weeks earlier. Blanche emphasized that the department must respect the rule of law and that continuing the payout would risk further erosion of public trust in the justice system.

Bipartisan Backlash Includes Senate Republicans Calling It ‘Improper’

The controversy sparked criticism from both sides of the aisle, with several Senate Republicans joining Democrats in denouncing the fund as an improper use of taxpayer money. Lawmakers argued that allocating billions of dollars to a politically charged settlement set a dangerous precedent and threatened the perceived neutrality of the DOJ.

Legal Timeline: Settlement Reopened, Trump Team Must Respond by June 12

The source notes that the original settlement was tied to Trump’s personal lawsuit alleging a leak of his tax returns. After the judges’ motion, the case was reopened, and Trump’s legal team has been ordered to file a response by June 12 . This deadline creates a narrow window for both sides to argue the merits of the fund and its alleged illegality.

Who Still Holds the Money? Unanswered Questions About Distribution

While the DOJ has halted the fund, it remains unclear how much, if any, of the $1.776 billion has already been allocated or spent. The source does not specify whether any payments were made before the abandonment, leaving open the question of whether recipints will need to return funds already received.

According to the report, the judges’ challenge also raises broader concerns about the separation of powers, as the settlement was negotiated while Trump still occupied the White House. The episode underscores the fragile balance between executive influence and judicial independence .