US Government Withdraws Controversial Victim Fund Project

The compensation fund was part of an out-of-court settlement that the Trump family had reached with the Internal Revenue Service (IRS) and the Department of Justice in January 2026. Donald Trump, his two elder sons, and the Trump Organization had sued the IRS and the US government for approximately ten billion dollars in damages. They accused a former IRS employee of unauthorized access to the Trump Organization's tax data during Trump's first term (2017–2021) and of leaking it to left-wing media. The lawsuit was withdrawn, and the claim for damages was dropped.

Criticism from Both Parties

In return, the IRS agreed not to retroactively audit Trump's old tax returns, which reports suggested involved potential tax liabilities in the hundreds of millions. The Department of Justice also announced the establishment of a $1.776 billion fund, with the amount deliberately alluding to the founding year of the United States. The fund was intended to compensate alleged victims of politically or ideologically motivated prosecutions under the previous administrations of Barack Obama and Joe Biden.

Critics quickly voiced concerns that individuals involved in the violent storming of the US Capitol on January 6, 2021, and who were prosecuted under Biden, could also benefit from the fund. After taking office in 2025, Trump had issued pardons to many of the defendants at the time. Opponents called the fund a "pay-off" project for Trump loyalists and accused the administration of corruption.

Political Pressure from Congress

The resistance to the initiative came not only from the Democratic Party but also from within the ranks of the Republicans. Both Senate Republican Majority Leader John Thune and House Speaker Mike Johnson had reportedly expressed legal concerns to the White House. Republican Senator John Kennedy from Louisiana stated that the government "had no choice" but to follow the judge's decision.

The political significance of the issue grew because Republican senators threatened to block a $72 billion legislative package to tighten Trump's immigration policy if the fund was not stopped. This threatened to paralyze all legislation due to internal political disputes, even though the next congressional elections were still about five months away.

Open Legal Questions

The fear of a political stalemate is considered a central reason why Trump eventually relented. According to information from The New York Times, citing two anonymous sources, Trump had not been actively supporting the fund recently. An insider told the Reuters news agency that the White House had received an ultimatum. Trump himself was "not happy" with the development but saw it as the only way out.

Parallel to the political reversal, legal proceedings continued. The responsible federal judge in Miami, Kathleen Williams, who had supported the original settlement, announced on Friday that she would reopen the proceedings to investigate whether the civil lawsuit was a collusive sham. She wrote: "The decision of a party to file a frivolous lawsuit — for the sole purpose of obtaining a settlement — may be impermissible." Williams had once been appointed by President Barack Obama. Former judges had also criticized the Department of Justice for not making any effort to defend itself against the Trumps' civil lawsuit.

Reactions and Assessment

The Department of Justice also sharply commented on the judicial halt of the fund. The department wrote on X: "The Department of Justice disagrees strongly with the decision on the Anti-Weaponization Fund put forth by the United States District Court Judge in the Eastern District of Virginia, wherein the Court stated that, under no circumstances, may the Department of Justice proceed with…" At the same time, it announced that it would comply with the preliminary decision. It remained unclear whether the department would completely distance itself from the project or intend to revisit it at a later date.

Observers view the move as a tactical maneuver shortly before the June 12 hearing, at which Trump's lawyers must explain the background of the settlement to their court. The government is thus attempting to keep the political pressure out of the election campaign and, at the same time, not further burden the ongoing proceedings by waiving the fund. The final legal review of the settlement between the Trump family and the IRS, however, is still pending.

The reporting on this matter is based, among other sources, on reports from Axios, Politico, The New York Times, and Reuters. The news was broadcast on Deutschlandfunk on June 3, 2026, and distributed by the APA news agency.