Time was running out.<\/p>\n
President Trump had sued the I.R.S. for $10 billion, and a federal judge was pressing the Justice Department to explain how it could muster an independent defense of the agency against the man who ultimately controlled it.<\/p>\n
Behind the scenes, the job of addressing the vexing problem of how to settle the suit fell to a tight-knit group of lawyers, all of whom had allegiance to Mr. Trump.<\/p>\n
On one side of the talks was a Justice Department run by Todd Blanche, the acting attorney general who once served as Mr. Trump\u2019s criminal defense lawyer.<\/p>\n
On the other were the president\u2019s private lawyers, among them Boris Epshteyn, who was a former client of Mr. Blanche\u2019s. Mr. Epshteyn played a significant role in moving forward the deal to end the suit, coordinating and holding discussions with all of the sides involved: Mr. Trump, the president\u2019s personal lawyers and Justice Department officials, according to multiple people familiar with the matter.<\/p>\n
The discussions were so closely held that some senior White House officials told others that they were blindsided, learning of them only once the agreement was nearly complete.<\/p>\n
In the end, the lawyers\u2019 solution did not give Mr. Trump what his lawsuit had demanded, which was simply to move funds from the Treasury Department into his own pocket. But the agreement that was reached was still a big victory for the president and his allies: It set up a $1.8 billion fund<\/a> to pay people deemed to have been harmed by so-called government \u201cweaponization\u201d \u2014 possibly including hundreds of rioters charged with storming the Capitol on Jan. 6, 2021 \u2014 and released Mr. Trump and his businesses from potentially costly I.R.S. audits<\/a>.<\/p>\n This article is based on interviews with more than a dozen people who discussed internal deliberations about the I.R.S. suit on the condition of anonymity.<\/p>\n The White House did not respond to requests for comment. Mr. Epshteyn declined to comment.<\/p>\n A spokeswoman for the Justice Department said that anyone who believed they were a victim of government weaponization could apply for money from the fund, claiming that many people had been victimized by the Biden administration.<\/p>\n Much is still unknown about how the arrangement came about. But the plan drafted by a group of Trump allies posed conflicts of interest that are remarkable, even for an administration riddled with them.<\/p>\n As questions have mounted about the nature of the deal, the federal judge who oversaw the lawsuit, Kathleen M. Williams, took the extraordinary step on Friday of revisiting the case<\/a>, asking whether the parties had deceived her.<\/p>\n When the details of the agreement were first revealed two weeks ago, Democrats and former government officials lodged accusations of corruption and self-dealing, and even some Republicans reacted with scornful disbelief. Some G.O.P. senators were so angry they abandoned plans<\/a> to approve a measure to finance the administration\u2019s immigration crackdown.<\/p>\n Within days of the agreement becoming public, and before the judge raised questions about it, senior administration officials began preparing to get rid of the fund amid the intense blowback. Those discussions were reported earlier<\/a> by The Wall Street Journal.<\/p>\n But while the agreement appeared to have emerged abruptly, it fused two ideas that had been kicking around in Mr. Trump\u2019s circle for years: a desire by him and his family to avoid extensive tax audits, and a longing by his allies to obtain financial restitution for legal wrongs they claimed to have suffered during the Biden administration.<\/p>\n In its broad strokes, the plan was in keeping with other maneuvers by Mr. Trump. As president, he has often used the levers of power at his command to serve himself at a moment when he still maintains control over the government, including having the United States accept a $400 million luxury jet from Qatar that he could fly as president and intend to take later. But in establishing a fund that would involve billions in taxpayer money, the deal stands alone.<\/p>\n The president himself has said little about how the agreement came together or who played a role in resolving the suit, which faulted the I.R.S. for the leak of his tax information to The New York Times during his first term. The closest he has come in recent days was a post on social media in which he declared that he had given up \u201ca lot of money\u201d by \u201callowing\u201d the fund to be created.<\/p>\n \u201cI could have settled my case, including the illegal release of my Tax Returns and the equally illegal BREAK IN of Mar-a-Lago, for an absolute fortune,\u201d Mr. Trump wrote. \u201cInstead, I am helping others, who were so badly abused by an evil, corrupt, and weaponized Biden Administration, receive, at long last, JUSTICE!\u201d<\/p>\n Trump v. Trump<\/p>\n Mr. Trump\u2019s lawsuit against the I.R.S. landed at the Justice Department with a thud<\/a> in late January.<\/p>\n By early spring, lawyers there were already wrestling with the legal dilemma<\/a> the president\u2019s pleading had created.<\/p>\n After all, to defend the I.R.S. against Mr. Trump, the department would have to fight a sitting president who was technically in charge of the agency and who demanded total loyalty from his subordinates.<\/p>\n Department lawyers were not the only ones who had identified this problem. Judge Williams, an Obama appointee who sits in Miami, had also homed in on it<\/a>, wondering whether there was actually a conflict to adjudicate, given that Mr. Trump was effectively on both sides of the suit.<\/p>\n The suit contended that the I.R.S. had not done enough to prevent a contractor for the agency, Charles Littlejohn, from leaking to the news media reams of Mr. Trump\u2019s tax information, along with the returns of hundreds of other very wealthy Americans during the president\u2019s first term in office. Even though Mr. Littlejohn was prosecuted by the Biden administration and sentenced to five years in prison<\/a>, Mr. Trump argued he was owed $10 billion by the I.R.S.<\/p>\n At first, there was a hope inside the Justice Department that lawyers would respond to the suit with a procedural maneuver to side step or delay the case. One option department lawyers quietly discussed was to ask Judge Williams to put the suit on hold until after Mr. Trump left office.<\/p>\n But that never happened. And it left Mr. Blanche and his team in a tight spot: They did not want the Justice Department to go into court and fight the suit, as it normally would, but also did not want to settle it by paying Mr. Trump directly, according to people familiar with their thinking.<\/p>\n Ending the case by funneling taxpayer money straight to the president struck them as politically untenable. Some department officials even worried that doing so could, under a future Democratic administration, expose them to a criminal investigation of conspiracy to defraud the government.<\/p>\n Inside the I.R.S., the suit was treated more or less as business as usual, even though the plaintiff was the president. Lawyers at the agency followed normal procedures for responding to claims and prepared a 25-page memo<\/a> for the Justice Department, outlining their views of the case.<\/p>\n In the memo, the I.R.S. recommended that the department move to dismiss the suit, pointing to two main problems: It had been filed too late and had wrongly blamed the I.R.S. for the actions of Mr. Littlejohn.<\/p>\n I.R.S. officials sent the memo to colleagues in the Treasury Department but it remains unclear whether those Treasury officials ever passed it on to the Justice Department. In fact, no Trump administration lawyer responded to the president\u2019s suit at all \u2014 or even made an appearance on the court docket.<\/p>\n What finally pushed Judge Williams into action was a request on April 17 from one of Mr. Trump\u2019s private lawyers, Alejandro Brito \u2014 not from a government lawyer \u2014 to delay all proceedings in the case for three months. A week later, the judge effectively ordered the Justice Department to tell her whether it intended to defend the I.R.S., giving the department until May 20 to provide an answer.<\/p>\n The pressure of that deadline set off a scramble, as lawyers on both sides of the suit started looking for a way to resolve the case and avoid further scrutiny from the judge.<\/p>\n Central in the negotiations was Trent McCotter, Mr. Blanche\u2019s senior deputy and a rising star in the department, according to people familiar with the talks. He served as one of the administration\u2019s chief interlocutors with personal lawyers in Mr. Trump\u2019s orbit, including Daniel Epstein, who often works with Mr. Epshteyn and once served as a special assistant to Mr. Trump during his first term in the White House.<\/p>\n Ultimately, the discussions about settling the I.R.S. suit were combined with talks about ending two other unusual claims previously filed by Mr. Epstein, who works for America First Legal, the outside group co-founded in 2021 by Stephen Miller, Mr. Trump\u2019s powerful White House adviser. Those claims demanded that the Justice Department pay the president about $230 million<\/a> in compensation for the investigation into possible ties between Russia and his 2016 campaign, as well as the well-publicized F.B.I. search of Mr. Trump\u2019s Mar-a-Lago estate for classified documents in 2022.<\/p>\n The idea that emerged was a global settlement of all of the claims that would push Mr. Trump away from the politically damaging effort to take money for himself. Instead it would create a fund for his allies and supporters \u2014 including the pardoned Jan. 6 rioters \u2014 who believed they had been wronged in the courts by previous Democratic administrations.<\/p>\n Mr. McCotter proposed a patriotic marketing gimmick, setting the fund\u2019s amount at the symbolic sum of $1.776 billion, according to people familiar with the idea.<\/p>\n Still, it was not entirely a new idea.<\/p>\n In mid-2025, Ed Martin, a longtime advocate for the Jan. 6 rioters who was leading the Justice Department\u2019s pardon office and a special working group intended to counteract government weaponization, had proposed a plan to address what he believed was mistreatment of Trump supporters by the legal system, according to people familiar with the matter. Mr. Martin envisioned a \u201ctruth commission\u201d of sorts that would assess accusations of misconduct by the Justice Department and possibly make payouts to worthy claimants.<\/p>\n He even floated the idea to senior administration officials like Robert F. Kennedy Jr., the health and human services secretary who has long complained that Americans were harmed by the government\u2019s response to Covid-19, according to a person with direct knowledge of the exchange.<\/p>\n Mr. Blanche, who has often clashed with Mr. Martin<\/a>, rejected the idea, the person said. But with the May 20 deadline quickly approaching, the Justice Department, at Mr. McCotter\u2019s urging, came up with its own plan to redress the supposed past wrongs suffered by the president\u2019s supporters.<\/p>\n The plan was closely based on an Obama-era case called Keepseagle v. Vilsack, a class-action lawsuit that gave hundreds of millions of dollars to Native American farmers to settle accusations of government discrimination. Mr. McCotter took the idea to the Office of Legal Counsel, which offers advice on the law to Justice Department leaders. The office, run by T. Elliot Gaiser, a former clerk for Justice Samuel A. Alito Jr., blessed the proposal, agreeing that Keepseagle could serve as a model.<\/p>\n When the plan was made public, it faced an avalanche of criticism<\/a>. The Treasury Department\u2019s top lawyer, a Trump appointee, resigned<\/a>.<\/p>\n Among the loudest critics were former Justice Department lawyers who had worked on the Keepseagle case, who pointed out that the Keepseagle settlement was overseen by a federal judge after years of litigation and analysis of the claims and evidence.<\/p>\n The resolution to Mr. Trump\u2019s suit against the I.R.S., by contrast, was reached in private by lawyers loyal to the president and without any judicial oversight.<\/p>\n Appearing on CNN in recent days, Mr. Blanche was asked directly who came up with the terms of the agreement<\/a> and said that there had been negotiations between Mr. Trump\u2019s \u201coutside counsel\u201d and the Justice Department.<\/p>\n But he quickly added, \u201cNot me.\u201d<\/p>\n Broad Immunity From Audits<\/p>\n There was more.<\/p>\n Even as the two sides were hashing out the contours of the fund, there were also discussions about a second agreement that would end the lawsuit: a plan to give the Trump family and their businesses broad protection from I.R.S. investigations of tax returns they had already filed.<\/p>\n