(NEW YORK) — The Department of Justice is finalizing a deal to launch a so-called “Truth and Justice Commission” and establish a compensation fund of $1,776,000,000 to pay claims made by alleged victims of government “weaponization” in exchange for President Donald Trump dropping his ongoing lawsuit against the Internal Revenue Service, sources told ABC News.
Sources told ABC News that the proposed deal — which is likely to face legal hurdles and has already been criticized by Democrats as a “slush fund” for Trump’s allies — arose after months of deliberations between the White House and DOJ officials who originally attempted to craft a legal justification for the settlement to compensate Trump directly.
Internally, DOJ lawers believed they could ignore the conflict of interest outright, privately arguing that Trump has both the right to sue as a private citizen and the power to command the executive branch as president, according to sources familiar with their discussions.
Advocating a centuries-old legal principle known as the “rule of necessity,” DOJ lawyers have argued that no alternative existed other than letting the lawsuit proceed with Trump acting as the plaintiff while being directly in charge of the defendants — the IRS and Treasury — according to sources.
Sources said that plan was ultimately scuttled in favor of the $1.776 billion compensation fund — with the figure being a nod to the nation’s founding — as the judge overseeing Trump’s IRS lawsuit began to raise issues with Trump suing the very government he leads. In an order last month, U.S. District Judge Katheen Williams ordered Trump’s lawyers in the case and the Department of Justice to submit court filings by next week to justify whether both sides of the case were sufficiently adverse for the matter to proceed.
Terms of the proposed compensation arrangement could change before the deal is finalized, sources said.
Judge Williams also appointed a group of prominent attorneys — including a former solicitor general as well as a federal judge — to weigh in on the case.
In a court filing this week, the attorneys identified serious issues with the lawsuit, arguing that Trump has “extraordinary” control over the defendants in the case and that the “circumstances raise the specter that Defendants and their attorneys may instead be operating at the President’s direction.”
“Additionally, since taking office, President Trump has significantly expanded the President’s oversight and control over the Attorney General and DOJ, including in ways that blur the line between fidelity to the President’s policy priorities and fidelity to the President himself,” the filing said.
Trump sued the IRS after a government contractor pleaded guilty in 2023 to stealing the tax information of Trump and other wealthy Americans and leaking it to media outlets in 2019 and 2020.
With Judge Williams scrutinizing the case, sources said that DOJ officials formulated the proposal to create a compensation fund on the condition that Trump drops the lawsuit as well as two civil claims for $230 million related to the Russia collusion investigation he faced during his first term in office and the 2022 search of his Mar-a-Lago estate.
Trump himself would not be eligible for payment from the fund for those three dropped claims, though entities associated with the president are not barred from filing claims, the sources said.
Sources said the “President Donald J. Trump Truth and Justice Commission” would include five commissioners — four of whom are appointed by the attorney general — that Trump would have the right to remove without cause. The commission would also be under no obligation to disclose the process for awarding the nearly $2 billion.
It is unclear how Judge Williams might respond to the proposed settlement — which has yet been disclosed to the court — though DOJ lawyers believe the settlement would not require any approval from the court.
Democratic lawmakers have already raised concerns about the reported settlement and called on Congress to pass legislation to restrict the use of taxpayer dollars for the proposed compensation fund.
“It’s outright corruption. What we’re seeing here is outright corruption,” Rep. Alexandria Ocasio-Cortez, D-N.Y., said Friday. “We’re looking at a billion dollars for a ballroom; $1.7 billion for a slush fund for the president’s friends.”
Across the aisle, Pennsylvania Republican Rep. Brian Fitzpatrick suggested the matter could end up before the Supreme Court.
“I don’t even know how that’s allowable to happen,” Fitzpatrick told ABC News regarding the compensation fund. “It sounds like a question our colleagues across the street are going to have to resolve pretty quickly.”
Copyright © 2026, ABC Audio. All rights reserved.
