A coalition of individuals and organizations has initiated legal proceedings in Alexandria, Virginia, challenging the creation of a $1.8 billion federal compensation fund established in May 2026. The plaintiffs argue the fund violates constitutional principles and exceeds executive branch authority.
The legal challenge was filed on a Friday by several parties, including Andrew Floyd, a former federal prosecutor who worked on cases related to the January 6, 2021 Capitol events, and Jonathan Caravello, a California State University Channel Islands professor who was previously acquitted of assault charges. Organizations joining the lawsuit include the National Abortion Federation, Common Cause, and the city of New Haven, Connecticut.
The contested fund emerged from a settlement between the current administration and the Internal Revenue Service regarding leaked tax records. According to government announcements made on May 19, the fund would provide a systematic process for individuals claiming they were targeted by federal government actions. The Department of Justice’s judgment fund would finance the $1.776 billion reserve.
The plaintiffs contend the fund operates without proper congressional authorization and violates the Administrative Procedure Act. They argue that Congress holds exclusive authority over federal spending and appropriations, making the fund’s creation through executive action constitutionally problematic.
Critics have raised concerns about the fund’s lack of oversight mechanisms. The program reportedly does not require judicial review or mandate disclosure of recipient identities and compensation amounts. This opacity has prompted lawmakers from both political parties to express reservations about the fund’s implementation and purpose.
In response to these concerns, a bipartisan group of House representatives introduced legislation on Thursday aimed at preventing federal money from being allocated to the fund. The controversy has also affected broader legislative proceedings, with Senate Majority Leader John Thune postponing a vote on a major budget reconciliation package.
Enrique Tarrio, former leader of the Proud Boys organization who received a presidential pardon after facing a 22-year sentence, has publicly stated his intention to seek between $2 million and $5 million from the fund.
The plaintiffs argue the fund discriminates based on political viewpoints, potentially violating First Amendment protections. They claim the program excludes certain individuals based on the political affiliation of those who initiated actions against them.
New Haven Mayor Justin Elicker expressed concerns about taxpayer funds being allocated without proper regulation or oversight. The National Abortion Federation has raised specific concerns about the fund potentially benefiting individuals pardoned for violations of the Freedom of Access to Clinic Entrances Act.
The Department of Justice has defended the fund by citing historical precedent, specifically referencing a 2011 settlement in Keepseagle v. Vilsack, which allocated $680 million to indigenous farmers who experienced discrimination. Acting Attorney General Todd Blanche acknowledged that while a judge approved the earlier settlement, no judicial approval was obtained for the current fund, though he maintained this distinction was not significant.
The plaintiffs, represented by Democracy Forward, are seeking an injunction to prevent the fund’s implementation while litigation proceeds. The case highlights ongoing debates about executive authority, congressional spending powers, and the proper allocation of taxpayer resources.
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