President Donald Trump speaks to members of the media as he arrives at Joint Base Andrews in Maryland on May 20, 2026.
Evelyn Hockstein | reuters
Congress will have its best chance in the courts to block the controversial $1.8 billion “Lawfare” compensation fund set up by the Justice Department to settle President Donald Trump’s lawsuit against the Internal Revenue Service, former federal prosecutors told CNBC on Wednesday.
The attorney, who is now in private practice, said members of Congress have good legal grounds to challenge the use of taxpayer money for the fund, which will allegedly pay people who were unfairly targeted by the DOJ under the Biden administration.
Two days after Trump and Acting Attorney General Todd Blanch announced the creation of the fund, skeptics from across the political spectrum emerged to explore next steps to challenge its legality. Challenges could make their way through the court system and go before the Supreme Court over the duration or longer of Trump’s presidency.
Opponents have several avenues for lawsuits that could cause delays. “Anti-Weapon Fund” That could range from underpaying claimants, or potentially depleting the fund altogether, lawyers said.
On Wednesday, two police officers who protected the US Capitol from a mob of Trump supporters on January 6, 2021, sued Trump in federal court in Washington, seeking to block the funds from going into effect.
It remains to be seen whether officials will find legal grounds to challenge the fund or whether their theory of why it is illegal will hold up in court.
“This is one of the most corrupt acts we have seen,” said chris matteiA trial lawyer in Connecticut who previously headed the Financial Fraud and Public Corruption Unit of the U.S. Attorney’s Office in the state.
“Essentially, you have a president who used a frivolous lawsuit to create an excuse within a completely corrupt Justice Department to agree to create a fund to pay the president’s supporters and exonerate the president from any tax consequences,” Mattei, who practices at Koskoff, Koskoff & Beider, said.
He was referring to the agreement that prevented the IRS from taking audits or enforcement actions against Trump and his family members for filing taxes before the settlement.
Tourists walk past the US Capitol and are seen in the window of an ambulance parked on Capitol Hill in Washington, DC, US, on April 14, 2026.
Evelyn Hockstein | reuters
Trump told reporters on Wednesday that he was not involved in the agreement that created the fund, but defended its purpose, saying that “people are destroyed” by the weaponization of the law against the Jan. 6 Capitol protesters and others.
“They went to jail, their families were ruined, they committed suicide,” Trump said. “You know, both the Biden administration and the Obama administration, I mean, the Obama administration started it.”
“The Biden administration is terrible in terms of what it’s done to people,” Trump said. “We are reimbursing those people for their legal fees and their costs and anyone else involved.”
Another former federal prosecutor, nema rahmani“I still think the “best legal argument” against the fund is Congress saying it’s a violation of the Appropriations section of the Constitution,” he told CNBC.
The Appropriations Clause of the Constitution prohibits the U.S. Treasury from making payments that are not authorized by law passed by Congress.
The DOJ clearly suggested in its statement announcing the fund on Monday 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 appropriation that allows DOJ to adjudicate cases and make payments.”
The department also said there is a legal precedent for such a fund, pointing to the creation of a $760 million fund by the Obama administration to address claims by Native American farmers who were discriminated against by the Agriculture Department.
Rahmani, who practices law in Los Angeles, rejected the idea that the anti-weapon fund could receive money from the DOJ’s decision fund.
“This is not a clear delegation by the Congress,” he said. There is no statutory, legislative authority for this, which means that legally, the courts will be very skeptical.”
“This is not a 9/11 fund,” Rahmani said. “This is not something that is being authorized or established by Congress.”
The Justice Department defended the new funding, with a spokesperson saying by email: “The only illegal and corrupt thing about this situation is the previous administration’s shameless weaponization of federal resources to retaliate against people with opposing political beliefs. The Department will continue to expose this law and ensure that those who have experienced injustice are repaid.”
Various legal options to challenge the new DOJ funds
While individuals can sue to stop funds by citing the Appropriations Clause, private citizens often have difficulty 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 lasting problems, both Rahmani and Mattei said.
On Wednesday, some MPs expressed unhappiness about the fund.
Rep. Brian Fitzpatrick, R-Pa., said, “As far as I’m aware, this is a completely unprecedented arrangement where you effectively have, you know, the same party negotiating on both sides of the table over taxpayer money that is now going to be distributed apparently without any congressional involvement. So it’s extremely concerning.”
“We have to unpack this and then figure out what we can do within the Article One authority to stop it or eliminate it,” Fitzpatrick told reporters at the Capitol, referring to Congress’ powers outlined under Article One of the Constitution.
Fitzpatrick wrote in a letter to Blanch on Wednesday, “to express my immediate concern” about what he called “a massive discretionary fund with no congressional oversight or approval.”
He said in the letter that the funds “represent an alarming decline in the transparency of our institutions and our commitment to American taxpayers.”
Lawmakers on both sides of the aisle spoke out against the creation of the fund on Wednesday.
Representative Jamie Raskin, D-Md., told reporters, “The $1.8 billion slush fund is completely illegal and unconstitutional because Congress never appropriated the money.”
Raskin said, “The President is not properly funded, and is therefore lawless.”
“Secondly, even if Congress wanted to, which we never would, we could not do that, because the 14th Amendment states that the United States shall not pay any debts arising out of rebellion or insurrection against the Union, and any such debts are void in the eyes of the law,” Raskin said.
Raskin introduced a bill later Wednesday that would block federal money from being used to fund the DOJ.
The legal challenge will most likely come from Congress
Mattei, the Connecticut attorney, said, “If there is going to be any legal challenge to the creation of the fund … it is likely to come from members of Congress, who will allege that the purpose of the fund is a misuse of funding authorized by Congress.”
Mattei also said it was possible that a private group would challenge the legality of the fund under the Administrative Procedure Act, which regulates the administrative actions of federal agencies.
A pending legal challenge to the construction of Trump’s $400 million White House ballroom is under fire by a private group alleging the project violates the APA.
Mattei also speculated that attorneys general of individual states could sue to block DOJ funds by arguing that it is giving alleged victims of prosecution a monetary recourse that is not available to individuals with claims related to other types of government wrongdoing.
Both Mattei and Rahmani said that in addition to the source of its funding, the fund’s unusual structure provides multiple grounds for legal challenges that could delay or derail the fund.
The fund is supposed to have five members, each appointed by the U.S. Attorney General, and one member selected in consultation with congressional leadership. The President can remove any member of the panel.
Mattei said he expected a legal challenge would be filed under the APA related to the structure of the fund’s membership, which was set by the DOJ, not Congress.
“Then you have all kinds of lawsuits from people who are denied compensation … and people like the police officer (who filed the lawsuit Wednesday) challenging the compensation,” Mattei said.
Mattei said he believed the range of options available to the fund for legal challenges meant it could be prevented from operating for some time.
“I suspect that at some point, there will be a lawsuit that will be allowed to proceed to the discovery phase, and those funds will likely be frozen during that lawsuit,” he said.
“I think plaintiffs challenging the formation of this fund or the administration of this fund or the manner in which it is monitored will have a lot of work to do,” Mattei said.
—Justin Papp Contributed to this report.