Judge blocks Elon Musk and DOGE form Treasury payment systems | PaymentsSource

A federal judge on Friday night prevented President Donald Trump’s government cost-cutting unit from accessing Treasury payment systems for at least a week while a state-led lawsuit is heard in court.

U.S. District Judge Paul A. Engelmayer’s court order  says the Trump administration’s move, led by billionaire Elon Musk, created a risk that sensitive data could be exposed or was vulnerable to hacking. Englemayer, a New York-based Obama-appointee, said the Department of Government Efficiency must stop accessing Treasury payment systems and destroy any records they have already accessed.

 The ruling is in effect until at least Feb. 14, when a hearing is scheduled in New York before U.S. District Judge Jeannette Vargas, a Joe Biden appointee. 

DOGE did not respond to a request for comment Saturday morning. 

Attorneys general representing Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont and Wisconsin filed the lawsuit.

Engelmayer said the states would likely show that DOGE’s access is illegal.

 Engelmayer’s emergency order said only civil servants with a “need for access who have passed all background checks, security clearances and information security training” required by law can access Treasury systems.

 Political appointees or “special government employees,” a term Trump has given to Musk and Musk’s staffers, cannot access the system, according to Engelmayer’s ruling.. 

“From the moment Elon Musk and his DOGE employees gained unprecedented access to our personal private data, state bank account details, and other sensitive information, Americans across the country have been horrified,” said New York Attorney General Letitia James, in a Saturday release following the judge’s ruling. 

“Over the past week, my office has heard from more than a thousand New Yorkers who were afraid they would lose their privacy and the critical funding their communities count on because of Musk and DOGE’s interference. We knew the Trump administration’s choice to give this access to unauthorized individuals was illegal, and this morning, a federal court agreed,” James said.

James had previously sued Trump in 2022 over the property valuations he used to obtain loans from banks. Trump, his sons and several business associates were found guilty of improperly inflating the values and a Manhattan judge ordered a $464 million penalty. Trump has appealed. 

The Treasury Department disburses Social Security and Medicare benefits, tax payments, compensation and funds tied to government contracts. In 2024, the department made $7 trillion in payments. These payments are made by the Bureau of Fiscal Service, a Treasury unit that covers tens of thousands of different types of transactions for various government activities. 

In earlier interviews, payment experts said an interruption or compromise of these payments could endanger the economy. “This is code red. There is no other way to describe it,” Theodora Lau, founder of Unconventional Ventures, a consulting firm that works with banks and fintechs, told American Banker this week. 

As public outcry and legal pressure over DOGE’s Treasury access grew,  the Trump administration earlier this week limited access to Tom Krause, the CEO of Cloud Software Group, and Marko Elez, a DOGE staffer. 

The Treasury lawsuit is one of several suits that have been filed against the Trump administration and DOGE, contending Musk and DOGE are violating privacy rights and other laws covering government records.  

Trump signed an executive order on his first day in office repurposing the U.S. Digital Service, founded by President Barack Obama in 2014, to become DOGE, with the goal of “modernizing federal technology and software to maximize governmental efficiency and productivity.”

Still, concerns about the Treasury and privacy rights are valid. Charles Littlejohn, a contractor with the Internal Revenue Service, stole the tax returns of Trump and other prominent billionaires between 2018 and 2020 and then leaked them to news organizations. The IRS recently notified more taxpayers that their data had been stolen, according to Bloomberg.