A federal appeals court on Tuesday declined to block sanctions imposed against President Donald Trump, two of his attorneys and other parties involved in a lawsuit against the Internal Revenue Service (IRS) that a lower court previously concluded was wrongfully filed to facilitate a multibillion-dollar settlement.
In a 22-page order, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit denied an emergency motion seeking to stay sanctions imposed earlier this year by U.S. District Judge Kathleen Williams. The appellate court found the parties had not shown they were likely to succeed in overturning the sanctions order while their appeal proceeds.
The ruling leaves intact, for now, sanctions stemming from a lawsuit Trump, his sons Donald Trump Jr. and Eric Trump, and the Trump Organization filed against the IRS and Treasury Department in January alleging a former IRS contractor improperly accessed and disclosed their tax returns. The lawsuit sought at least $10 billion in damages.
Before any substantive legal process began, that case took an unusual turn after Trump’s team voluntarily dismissed it. Former federal judges later urged the court to reopen proceedings after the DOJ announced a settlement agreement in which the Treasury Department would establish a $1.776 billion “anti-weaponization” fund to facilitate payments to individuals claiming to be wrongfully targeted by past administrations, including individuals convicted of violently rioting at the U.S. Capitol on Jan. 6, 2021.
The settlement, which has since been put on hold, also would have blocked future administrations from pursuing tax audits or bringing charges against Trump and his family.
The former judges argued the agreement was the product of collusion and amounted to a fraud of the court. Judge Williams ultimately agreed that the parties – President Trump and executive agencies he controls – were not genuinely adverse and that the litigation had been used to provide legal cover for a settlement lacking a viable basis in law or fact. She imposed non-monetary sanctions, including referring attorney Alejandro Brito to the Florida Bar, restricting attorney Daniel Epstein's ability to appear pro hac vice in South Florida federal court for one year and barring the parties from citing the purported agreement as evidence of a settlement reached in the case during official proceedings.
In Tuesday's order, the Eleventh Circuit panel said Trump’s team had not made a strong showing that the district court clearly erred in concluding the lawsuit and settlement were collusive or that the parties acted in bad faith. The judges noted that the sanctioned parties "did not submit or offer any evidence to explain their litigation conduct or demonstrate that the lawsuit and the settlement were not collusive."
The appellate court also rejected arguments that the speech-related sanction violated the First Amendment, finding that the district court's order was narrowly tailored to prevent the parties from presenting the agreement as evidence of a settlement reached in the litigation during official proceedings.
Asked about the ruling, a spokesman for Trump's legal team highlighted the original leak of Trump’s tax returns, promising the president “continues to hold those who wrong America and Americans accountable.” The official, who declined to speak on the record, did not comment on the lawyers’ sanctions being upheld or potential implications for Trump’s legal team.
The dispute has become a focal point of the president’s broader effort to combat what he and allies describe as the political "weaponization" of federal law enforcement and government institutions, something that’s drawn bipartisan backlash. In seeking approval of his nomination before the U.S. Senate, Attorney General Todd Blanche said the “anti-weaponization” fund “never started” and would not be implemented.
Nonetheless, some Trump confidants and DOJ officials continue to maintain that Trump is interested in payouts to allies. Ed Martin, a conservative activist who served in senior roles in the DOJ before leaving in August, told a conservative podcaster on Monday that Trump had not abandoned the idea of a weaponization fund.
“Nobody from the top all the way down in DOJ and at the White House has given up on the idea of reimbursing people for the costs of being targeted by political weaponization,” Martin said. “Nobody's given up."
A spokesperson for the DOJ subsequently told Scripps News the fund was “dead,” though the official noted that “any claimant is free to pursue remedies through the courts as the law allows.”
Meanwhile, the underlying appeal in the IRS settlement case remains pending, and the district court has yet to rule on requests to reopen the case nor definitively indicate whether additional attorney-fee sanctions should be imposed.
