The Justice Department is reportedly reassuring political allies that plans to distribute a $1.776 billion compensation fund remain active, directly contradicting recent public testimony from Acting U.S. Attorney General Todd Blanche. The quiet assurances come as the administration faces ongoing legal challenges and political scrutiny over a May 2026 settlement that established the taxpayer-financed pool.
According to reports published Thursday by Forbes and The Atlantic, government officials are exploring alternative administrative avenues to distribute the payouts. The underlying settlement was originally negotiated to resolve a $10 billion civil lawsuit brought by President Donald Trump against the Internal Revenue Service over unauthorized tax record leaks.
Blanche testified before a House subcommittee on June 2 that the administration was not moving forward with the proposal. The Justice Department subsequently filed court documents on June 5 attempting to dismiss pending lawsuits against the fund by arguing the litigation was now moot.
However, plaintiffs and government watchdog groups are refusing to drop their legal challenges. They point to Section VIII of the government’s settlement agreement, which legally dictates that the terms can only be modified with a formal written agreement. Because Blanche has refused to issue a written order rescinding the program, the legal mechanism to execute the payouts remains technically active. The original agreement also included a separate provision granting sweeping tax immunity to the Trump family and related corporate entities.
A federal judge declined on Wednesday to formally pause the fund based on the government’s claim that it was already suspended. A critical hearing is scheduled for Friday to evaluate an existing temporary pause in a separate lawsuit. Lawmakers initially raised alarms that the loosely structured fund could serve as a financial pool for the president’s political allies, drawing widespread congressional backlash.
The legal stalemate hinges on whether the courts accept verbal assurances from the Justice Department in the absence of documented contractual changes. With Friday’s hearing approaching, the administration must defend its legal standing while managing continued public focus on the Judgment Fund distribution.