Congress is the best chance to stop Trump’s ‘law enforcement’ fund, lawyers say

Congress will have the best chance in the courts to block a $1.8 billion “statutory” compensation fund set up by the Justice Department to settle President Donald Trump’s lawsuit against the Internal Revenue Service, former prosecutors told CNBC on Wednesday.

Those attorneys, who are now both independent, say members of Congress have good legal grounds to challenge the use of taxpayer money in the fund, which is said to pay off people who were wrongfully targeted by the DOJ under the Biden administration.

Two days after Trump and Acting Attorney General Todd Blanche announced the creation of the fund, critics from across the political spectrum emerged to find the next steps to challenge its legitimacy. The challenges could go through the court system during the Trump administration or longer and could end up at the Supreme Court.

Opponents have various avenues of litigation that could delay the “Anti-Arms Fund” from paying applicants, or possibly kill the fund altogether, lawyers said.

On Wednesday, two police officers who protected the US Capitol on January 6, 2021, from a crowd of Trump supporters, sued Trump in federal court in Washington, seeking to prevent the fund from starting to operate.

It will be seen whether these police officers will be found to have the authority to oppose this fund or whether their opinion as to why it is illegal will succeed in court.

“This is one of the most corrupt practices we’ve ever seen,” said Chris Mattei, a Connecticut prosecutor who previously headed the state’s U.S. Attorney’s Office’s financial fraud and public corruption division.

“In fact, what you have is a president who used an absurd case to create an excuse within the Department of Justice that was completely tainted to agree to create a fund to pay the president’s supporters and to immunize the president from any tax consequences,” said Mattei, who works at Koskoff, Koskoff and Bieder.

He was referring to an agreement that prevents the IRS from auditing or verifying that Trump and his family filed tax returns before they were paid.

On Wednesday, Trump told reporters that he was not involved in solving the problem that created the fund, but he defended its purpose, saying that “people have been destroyed” by the use of the law against the defendants in the Capitol on January 6 and other people.

“They go to jail, their families are ruined, they kill themselves,” Trump said. “You know, the whole Biden administration and the Obama administration, both, I mean, the Obama administration started.”

“The Biden administration was terrible at what they did to people,” Trump said. “We are reimbursing those people their legal fees and their costs and anyone involved.”

Another former federal prosecutor, Neama Rahmani, told CNBC, “I still think the best legal argument” against the fund “is that Congress says it’s a violation of the Constitution.”

The Appropriations Clause prevents the US Treasury from making payments that are not authorized by law as passed by Congress.

The DOJ, in its statement announcing the fund on Monday, consistently suggested that it would not violate the Appropriations Clause because, “The fund will receive $1.776 billion and [that] will come from the judgment fund, which is a permanent allocation that allows the DOJ to settle and pay lawsuits.”

The department also said that there is a legal precedent for a fund like this, pointing to Obama’s creation of a $760 million fund to deal with the claims of Native American farmers who were discriminated against by the Department of Agriculture.

Rahmani, who practices law in Los Angeles, dismissed the idea that the Anti-Disarmament Fund could receive money from the DOJ’s judicial fund.

“This is not clear to the members of Congress,” he said. “There is no formal, legal authority for any of this, which means, legally, the courts are going to be very skeptical.”

“This is not a 9/11 fund,” Rahmani said. “This is not something authorized or established by Congress.”

The Department of Justice has defended the new fund, its spokesman said in an email: “The only thing illegal and evil about this situation is the weapons of state used by former authorities to take revenge on those with opposing political beliefs. The Department will continue to expose this law and ensure that those who face injustice are made whole.”

While individuals can sue to freeze a fund by citing the Constitution, private citizens often have a difficult time convincing federal courts that they have legal standing to challenge government actions.

Members of Congress, who are responsible for voting on federal appropriations, are less likely to have trouble standing, Rahmani and Mattei said.

Some lawmakers on Wednesday expressed displeasure with the fund.

Rep. Brian Fitzpatrick, R-Pa., said, “As far as I know, it’s an unprecedented process where you’ve had, you know, the same group negotiating on both sides of the table about taxpayer funds now being disbanded without congressional involvement. So this is very concerning.”

“We have to figure out what it is and find out what we can do within the Article 1 authority to block or release it,” Fitzpatrick told reporters at the Capitol, referring to the powers of Congress as enumerated under Article 1 of the Constitution.

Fitzpatrick, in a letter to Blanche on Wednesday, wrote, “to express my urgent concern” about what he called “a large discretionary fund, without the oversight or approval of Congress.”

In the letter, he said the fund “represents a dangerous reversal of our institutions’ transparency and our commitment to the American taxpayer.”

Lawmakers from both parties spoke out against the creation of the fund on Wednesday.

Rep. Jamie Raskin, D-Md., told reporters, “The $1.8 billion slush fund is completely illegal and unconstitutional because Congress never appropriated the money.”

“The president can’t match the money, so there’s no law for that reason,” Raskin said.

“Secondly, even if Congress wanted to, we wouldn’t do it, we wouldn’t do it, because the 14th Amendment says that the United States will not pay any debts related to treason or rebellion against the union, and any such debts are null and void in the eyes of the law,” said Raskin.

Raskin, later Wednesday, introduced a bill that would prevent federal money from being used by the DOJ in the fund.

Mattei, a Connecticut attorney, said, “If there is going to be a legal challenge to the creation of this fund … it will likely come from members of Congress who will allege that the purpose of this fund is a misuse of funds authorized by Congress.”

Mattei also said it is possible that a private group will challenge the fund’s legality under the Administrative Procedures Act, which regulates the administrative activities of government agencies.

A pending legal challenge to Trump’s $400 million White House football stadium by a private group alleges the project violates the APA.

Mattei also speculated that state attorneys general could sue to block the DOJ fund, arguing that it provides victims of prosecutorial overreach with financial aid not available to people with claims related to other types of government wrongdoing.

Mattei and Rahmani both said that in addition to the source of its money, the unusual structure of the fund provides a number of legal challenges that could delay or kill the fund.

This fund should have five members, each of whom will be appointed by the US attorney general, with one member selected in consultation with congressional leadership. The president can remove any member of the board.

Mattei said he expects a legal challenge filed under the APA regarding the composition of the fund’s members, which is decided by the DOJ and not Congress.

“Then you can have all kinds of cases of people being denied compensation … and people like the police [who sued Wednesday] we are challenging the release of the compensation,” said Mattei.

Mattei said he thinks that the variety of methods available to deal with legal challenges to the fund means that it can be prevented from operating for a long time.

“I suspect that there will be a case that will be allowed to proceed to the discovery phase, and that fund during the trial may be closed at that time,” he said.

“I think that the plaintiff who challenges the formation of this fund or the governance of this fund or the way it is supervised will be more effective,” said Mattei.

– Justin Papp contributed to this report.