Trump’s Unconstitutional Anti-Weaponization Fund

Donald Trump’s “settlement” of his claims relating to the leak of his tax returns is outrageous on many levels.^[1]See, e.g., here, here, here, and here.  One is that the financing scheme for the settlement’s “anti-weaponization fund” is unconstitutional. The proposed source, the Judgment Fund, clearly is not available for this purpose nor is there any other legitimate source. Consequently, payments by the anti-weaponization fund would violate Article I, § 9, Clause 7 of the Constitution, which provides:

“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” 

Such payments would also run afoul of the Antideficiency Act (31 U.S.C. § 1341), which carries criminal penalties for knowing and willful violations (31 U.S.C. § 1350).

Like all federal expenditures, payments to satisfy court judgments against the United States or settlements of claims potentially leading to judgments require a congressional appropriation. To avoid having to review each individual judgment and settlement, Congress enacted a permanent, indefinite appropriation known as the Judgment Fund (31 U.S.C. § 1304).^[2]See also 28 U.S.C. § 2414 with reference to compromise settlements. However, the Justice Department’s attempt to use the Judgment Fund in this case is manifestly illegal for two reasons.

First, to be payable from the Judgment Fund a compromise settlement must result from the resolution of a genuine dispute between opposing parties.^[3]See, e.g., U.S. Government Accountability Office (GAO), 3 Principles of Federal Appropriations Law (3d ed., 2008) at 14-35, citing GAO and Justice Department opinions. The settlement here gives every indication of being a sham. Trump initially sued a federal agency of the executive branch he heads. He dropped the lawsuit as (and probably because) the judge questioned whether it involved a sufficiently adversarial relationship between the parties to constitute a case or controversy amenable to judicial resolution. Trump described the ensuing negotiations as “work[ing] out a settlement with myself.”  The Justice Department apparently offered no opposition to Trump’s claims at any stage although it had strong defenses, most notably that they were barred by the statute of limitations.   

Second, even if this is somehow regarded as a bona fide compromise settlement, it does not qualify for payment from the Judgment Fund. The Judgment Fund is available for the payment of money damages to identifiable parties to final judgments and compromise settlements.^[4]Id. at 14-38 and decisions cited. Consistent with many other precedents, a 1989 opinion by the Justice Department’s Office of Legal Counsel holds that the Judgment Fund can be used only for judgments and settlements “to pay specified sums of money to certain parties.”^[5]More broadly, a memo issued by former Attorney General Bondi strongly discourages settlements from including payments to individuals or entities that weren’t parties or victims in a case.

Under the terms of this settlement, none of the proposed $1.776 billion anti-weaponization fund goes to the parties or to any specifically identifiable recipients. Moreover, the stated purposes of the fund are wholly unrelated to the leaked tax return claims on which the settlement is supposedly based. Even the amount appears symbolic rather than a credible measure of damages related to the underlying claims. In short, the settlement has nothing to do with the claims it purports to settle.

Acting Attorney General Blanche cites Keepseagle v. Vilsack as precedent for use of the Judgment Fund here. Keepseagle involved a class action settlement of discrimination claims by Native Americans. Using the Judgment Fund, the court-approved settlement established a fund to pay claims by class members but further provided that any amounts left over after paying class members would be paid to non-profit organizations that supported Native Americans.

When it turned out after five years that class member claims were far less than anticipated and over half the settlement would go to non-profits, some class members sought to reopen the settlement. One of their arguments was that payments to non-profits violated the Judgment Fund. A federal district court and a court of appeals rejected this argument but not on the merits; they ruled that it was too late to raise the issue.

None of the four judges in Keepseagle endorsed use of the Judgment Fund for payments to non-parties. Indeed, the district judge expressed doubt that the Judgment Fund could be used for this purpose. One appellate judge wrote a lengthy dissent asserting emphatically that this was a clear misuse of the Judgment Fund that the court should correct.^[6]The dissent (p. 36) was prescient in predicting the abuse that could result from allowing Judgment Fund payments to non-parties. It offered as a hypothetical an executive branch settlement of $1 … Continue reading Thus, Keepseagle provides no legal support for the settlement here, and if anything, cuts in the opposite direction.^[7]Furthermore, the settlement in Keepseagle is readily distinguishable from the Trump settlement in many ways. It was an arms-length, court-approved resolution of a real dispute between adverse parties … Continue reading

In sum, it seems clear beyond reasonable doubt that the settlement here is a charade that ignores the claimants and has nothing to do with their claims. Rather, it’s merely a cover to illegally use the Judgment Fund to bypass Congress and raid the federal treasury to finance a large unauthorized spending program. The key players in this farce surely understand its illegality and potential criminal implications. It’s probably no coincidence that the general counsel of the Treasury Department, which is responsible for certifying payments from the Judgment Fund, resigned on the same day the settlement was announced.

This is not the first time the Trump administration has flouted the Constitution and the Antideficiency Act to spend taxpayer funds without the requisite congressional appropriation. It paid TSA and other Homeland Security Department employees during the recent partial government shutdown although no appropriation for their salaries was legally available. That action drew little scrutiny since it was popular with the public and politically expedient for both parties. This far more egregious abuse is already attracting much greater attention and skepticism.

What if anything will be done about this travesty remains to be seen. Two police officers who served during the January 6 Capitol riot have sued to stop it; however, their suit (and probably any others) will face major standing challenges. Perhaps this blatant affront to Congress will finally rekindle some interest by its members in performing their constitutional duties. But Congress will also face a steep climb since it would presumably take veto-proof majorities to overturn the settlement. Perhaps the best hope is that public and political pushback become sufficiently intense to force Trump to do a TACO.