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11th Circuit refuses to pause sanctions that put Blanche's Trump audit shield in doubt
Three 11th Circuit judges refused to pause sanctions over Trump's $10 billion IRS suit, keeping a bar on citing its settlement in official proceedings. The bar appears to reach Attorney General Todd Blanche's audit shield for the Trump family and business until the appeal is decided.
The Investor · Invest desk
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What happened
- A panel of Judges Adalberto Jordan, Robin Rosenbaum and Kevin Newsom found Trump had not made a strong showing that the trial judge committed clear error.
- Judge Kathleen Williams reopened the case this summer after former federal judges asked her to examine whether the IRS suit was a pretext for a favorable deal.
- Williams found Trump and his lawyers acted in bad faith and said the settlement with agencies he controls "had no viable basis in law or fact."
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Why it matters
- exposure Until the appeal is decided, the Trump family and company cannot put the settlement forward as legitimate in administrative or judicial proceedings, the forums where an audit shield would be tested.
- constraint One Trump lawyer stays referred to state bar regulators and another stays shut out of the south Florida federal court, so the career penalties land before any ruling on whether they were justified.
- decision Trump now has to pick where to attack the order next: a rehearing before all of the 11th Circuit's active judges, or a petition to the Supreme Court.
According to Bloomberg's account of the terms, the Justice Department's side of the May agreement had two parts. One was a $1.8 billion fund for victims of alleged government "weaponization". The other was a separate order from Blanche protecting the president, Donald Jr., Eric and the Trump Organization from audits or claims over past tax filings [4][3]. Set against a $10 billion lawsuit, the fund came to 18 cents per dollar claimed [1][1]. Blanche has since dropped it after pushback from Republicans in Congress [15]. No value for the audit shield has been disclosed. With the fund withdrawn as a plan, the shield is the reported term still operating [4][15].
Williams's July order bars Trump and certain officials from citing the deal in "official" proceedings as evidence that the settlement was legitimate [2]. When the panel rejected Trump's free-speech objection, it described those settings as "judicial, administrative, regulatory, or arbitration" proceedings [8]. A tax examination, or a court fight over past returns, would sit in that list [8].
In asking for the pause, Trump argued against keeping "an unconstitutional speech restraint and career-altering professional sanctions in force while this court considers an appeal that is overwhelmingly likely to succeed" [11]. The panel's reply was about the record. Trump and his attorneys "did not submit or offer any evidence to explain their litigation conduct or demonstrate that the lawsuit and the settlement were not collusive," the judges wrote [7]. Newsom, one of the three, was appointed by Trump in his first term [9].
This can go three ways. A higher court could accept the Justice Department's position, put by Acting Deputy Attorney General Trent McCotter, that Williams "lacks the authority to collaterally attack the settlement" [12]. In that case the shield comes back whole. Williams's sanction might also be read as not reaching Blanche's directive at all, since Bloomberg reported only that it appeared to cover it [3]. Or the sanctions stay in force for the whole appeal, as the panel's order now allows [1]. I think the third is the most likely. The refusal turned on evidence Trump did not offer, and the government's authority argument has not yet won over a panel that includes his own appointee [7][9]. The view is wrong if the full circuit grants rehearing or the Supreme Court issues a stay.
The fund is the other loose term. Trump has not signed off on changing the original agreement, and his critics say officials could revisit the compensation proposal later [16][17]. By leaving the deal unamended, Trump keeps a $1.8 billion commitment on paper while his lawyers defend the rest of the settlement in court [4][16].
What to watch
- Whether Blanche's directive is invoked in any IRS audit or tax claim against the Trump family or company, the first live test of whether the sanction covers it.
- Any move by officials to revive the $1.8 billion fund under the settlement terms Trump has not agreed to change.
- An 11th Circuit merits ruling on McCotter's argument that Williams had no authority to attack a settlement the Justice Department signed.