A federal judge appointed by President Biden dismissed New York Attorney General Letitia James’ lawsuit challenging President Trump’s Department of Government Efficiency initiative, ending a multi-state legal battle over Treasury Department access that began in early 2025.
Court Rules Challenge Moot
U.S. District Judge Jeannette Vargas ruled Wednesday that claims regarding DOGE-affiliated employees accessing sensitive Treasury systems are moot. The judge determined that since the Treasury DOGE team disbanded and no DOGE employees remain at the department, no access practice exists for the court to prohibit. Vargas separately rejected state claims about an automated payment-review system, finding no evidence of frozen or canceled federal payments owed to the states.
James led a coalition of 19 states in filing the lawsuit after Treasury granted DOGE-affiliated employees access to Bureau of the Fiscal Service systems. These systems process federal payments and contain sensitive financial information. The states argued the Trump administration exceeded its legal authority and put state financial data at risk.
DOGE Anti-Fraud Initiative
Trump established DOGE through executive order in January 2025, directing federal agencies to create dedicated teams identifying fraud, waste, and abuse before a July 4, 2026 termination date. Assistant Attorney General Colin McDonald reported the initiative recovered over $1 billion from trade fraud. The program included independent journalist Nick Shirley testifying before the Senate about tax dollar misuse and efforts led by Dr. Oz uncovering millions in stolen Medicaid funding through fraudulent New York City adult daycare centers.
Judge Vargas initially granted states a preliminary injunction in February 2025, barring Treasury’s DOGE team from accessing covered payment systems. She later modified the order to permit access for personnel meeting specific vetting, training, hiring, reporting, and mitigation requirements.
Ongoing Legal Battles
James has maintained a contentious legal relationship with Trump, launching a civil fraud lawsuit against him and the Trump Organization in 2022 after campaigning on investigating his business practices. That case initially resulted in penalties exceeding $450 million. An appeals court later upheld Trump’s liability while voiding the financial penalty. Neither the White House nor the New York attorney general’s office immediately responded to requests for comment on the dismissal.