Trump temporarily withdraws controversial victim fund – court halts funds

The Department of Justice had sharply criticized the court's decision to temporarily halt the fund, but at the same time announced it would comply with the order. A federal court in Virginia had prohibited the disbursement of funds to ensure that no money is irrevocably paid out while the case is not finally decided. A hearing has been scheduled for June 12.

The fund originated from a settlement in a civil lawsuit that Trump filed as a private individual against the US government in January. The lawsuit accused the Internal Revenue Service (IRS), an agency of the US Treasury Department, of unlawfully accessing tax data of the Trump Organization during Trump's first term (2017-2021) and sharing it with left-leaning media outlets. The parties subsequently settled the legal dispute.

Criticism from within own ranks

According to previous statements from the Department of Justice, around $1.8 billion was to flow into the new fund. This fund was intended to compensate individuals who, according to the government's portrayal, have become victims of politically or ideologically motivated state actions. Trump had stated that victims of the justice system must be compensated.

However, critics warn that taxpayer money could potentially be used to reward Trump supporters who participated in the violent storming of the Capitol in Washington on January 6, 2021, and were prosecuted under the previous administration of Joe Biden. On January 6, 2021, a violent attack on the parliamentary building in Washington took place, during which the election victory of Democrat Biden was to be officially confirmed.

The fund also faced sharp criticism within Trump's own Republican Party. Critics described it as "hush money" for Trump loyalists and accused the administration of corruption. Trump had issued numerous pardons after taking office in 2025.

Unanswered questions ahead of court hearing

The dispute over the fund had also burdened the parliamentary process in Washington. Votes on other budget items in Congress were postponed to exert pressure on Trump regarding the fund. This gave the controversy immediate significance for the budget process and government work.

By temporarily foregoing the fund, the administration is now attempting to avoid further undermining the court's injunction and to reduce political pressure. Observers view the decision as a tactical maneuver, as the substantive dispute over the use of funds remains open with the hearing on June 12.

It remains unclear whether the administration will revive the plan after the hearing or abandon it entirely. The court in Virginia will then likely rule on the admissibility of the fund's structure and the question of whether state funds can be used for the intended compensation.

Should the court permanently prohibit the fund, the settlement from Trump's civil lawsuit would be largely politically worthless. The government would then have to find other ways to politically implement the settlement – or renegotiate the agreement.