Trump officials announced a $1.8 billion compensation fund for presidential allies, raising legal questions and ethical concerns

WASHINGTON, D.C.—Democracy Defenders Fund today published an issue brief warning that the “Anti-Weaponization Fund” established by President Trump and the DOJ–tied to his $10 billion lawsuit over the leak of his tax returns–would be an unprecedented abuse of power and a violation of the Emoluments Clause. Worse, it would allow the president to funnel taxpayer dollars to his loyalists.

On Jan. 29, 2026, President Trump, his company, and his sons filed a $10 billion federal lawsuit against the Internal Revenue Service for the unauthorized release of his tax returns by an IRS contractor during his first term. The suit names the IRS and Treasury Department as defendants that are now represented by the Department of Justice, all agencies Trump oversees as president. The judge overseeing the case had raised serious questions about whether it constitutes a genuine legal dispute. Earlier this week, the president dropped the lawsuit with a follow up announcement of the establishment of a nearly $1.8 billion “Anti-Weaponization Fund,” the terms of which were agreed upon with the DOJ.

The negotiated provisions include:

• A five-member commission authorized to distribute the almost $1.8 billion in taxpayer dollars to purported victims of “lawfare and weaponization," which may apply to the nearly 1,600 insurrectionists charged in connection with the Jan. 6 Capitol attack. The members of this commission can be fired at will by the President and will operate mostly in secrecy with little to no transparency required to disclose the identities of the fund’s recipients, or the application, review, dissemination, and appeal processes—raising potential due process concerns.

• A demand for $230 million related to meritless administrative claims President Trump filed against the DOJ concerning the FBI's search of Mar-a-Lago and the Russia collusion investigation.

• A disclaimer that appears to exempt President Trump and the DOJ from liability from fraud or misuse of the funds.

• An attempt to bar the IRS from pursuing audits of Trump, his family members, and his businesses based on tax returns filed by them before the settlement date.

The brief states, “This case, while extreme, is not surprising. It is the latest and most brazen example of President Trump using federal institutions—law enforcement, regulatory bodies, and the courts—as vehicles for private gain. It is part of a demonstrated pattern of self-dealing that has spanned crypto ventures, foreign policy entanglements, and now, a lawsuit in which the plaintiff and the defendant are, in practical terms, the same person.”

“This is the most outrageous example of corruption of any US presidency in American history," said Amb. Norm Eisen (ret.), co-founder and executive chair of Democracy Defenders Fund. "In essence, this is similar to Trump driving to the Treasury, seizing $1.8 billion, and heading to a picnic with Jan. 6 insurrectionists and throwing that money into the air. This is unlawful and awful, the public is rightfully outraged, and the legal fights have only just begun."

“This is a grift at a magnitude the American public has never seen before from this administration,” said Andrew Warren, deputy legal director at Democracy Defenders Fund. “Trump’s contempt for the Constitution and for American taxpayers is once again on full display with this shameless, galling pursuit of a slush fund for his friends.”

“The Emoluments Clause prohibits a president from accepting any form of profit, gain, or advantage outside of his salary,” said Virginia Canter, chief counsel and director of anti-corruption and ethics at Democracy Defenders Fund. “If Trump is permitted to direct taxpayer funds to political loyalists through a fund he controls, it would be an outrageous and unlawful misuse of public funds for his own advantage.”

Read the full brief here.

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Democracy Defenders Fund brings together a nonpartisan team to work with national, state and local allies across the country to defend in real-time the foundations of our democracy.