Trump administration unveils $1.7bn fund to compensate his allies as he drops tax lawsuit

The US justice department has announced a $1.7bn (£1.3bn) fund to compensate allies of President Donald Trump who allege they were unfairly investigated by the Biden administration.

The "Anti-Weaponization Fund" was unveiled "in exchange" for the president dropping his $10bn lawsuit against the Internal Revenue Service (IRS) over the leak of his tax returns, said the justice department.

Democrats criticised the settlement as a "slush fund" paid out of taxpayer money for Trump and his cronies from a federal agency overseen by him.

The lawsuit's plaintiffs, which include Trump's elder sons and the Trump Organization, will receive an apology, but no monetary compensation, the department said.

But participants in the 2021 US Capitol riot who were pardoned by Trump and others who claim they were targeted by partisan federal investigators will be able to submit claims to the fund.

Monday's settlement came two days before a 20 May deadline for both sides to address whether a legitimate legal dispute existed - given that Trump now oversees the IRS through his administration.

On Monday, a spokesperson for Trump's legal team said the president was "entering into this settlement squarely for the benefit of the American people".

"He will continue his fight to hold those who wrong America and Americans accountable," the spokesperson added.

When the judge asked a group of legal experts to submit an analysis last week, they called Trump's lawsuit "unprecedented".

"A sitting president seeks monetary damages for alleged harm to his personal interests from an executive agency that he controls," the experts wrote in what is known as an "amicus brief".

The experts cited Trump's own statements that he controls both the IRS and the justice department lawyers handling the case.

Shortly after the dismissal was filed by Trump's legal team, the justice department announced an agreement to establish the so-called Anti-Weaponisation Fund that would provide a "systematic process to hear and redress claims of those who suffered under weaponisation and lawfare".

The fund will consist of a five-member commission, four of those appointed by the Attorney General, and will receive $1.776 billion to allow the justice department to settle and pay cases.

A report on who receives payments will be sent to the attorney general.

"The machinery of government should never be weaponised against any American, and it is this Department's intention to make right the wrongs that were previously done while ensuring this never happens again," said Acting Attorney General Todd Blanche.

The settlement agreement constituted a "breathtaking abuse of the tax and legal system," Brandon DeBot, policy director for the Tax Law Center at New York University, said in a statement.