The Obama administration paid $1.7 billion to Iran following three years of secret negotiations involving "decades-old legal disputes," according to a State Department letter obtained by the Washington Free Beacon.

This development was exposed after U.S. Rep. Mike Pompeo, R.-Kan. launched an inquiry in January. Many view the money transfer as a "ransom payment," as the settlement was announced close to the release of five American prisoners held in Iran.

After a long delay, the administration finally sent a letter to Pompeo stating that more taxpayer-funded financial transfers are likely in order to address some of Iran's legal claims against the United States.

"We are confident that this was a good settlement for the American taxpayer," said State Department Assistant Secretary for Legislative Affairs Julia Frifield.

Iran's legal battles ensued after the U.S. canceled a significant weapons deal following the 1979 Islamic revolution and hostage taking of U.S. personnel stationed in Iran. The State Department letter outlines secret meetings held in June 2014 and January 2015, whereby the Obama administration attempted to reach a settlement with Iran.

"The United States is continuing to vigorously litigate these claims at the [Iran-U.S. Claims] Tribunal [at the Hague], but is also open to discussing further settlements of claims with Iran, as we have done throughout the life of the Tribunal, with the aim of resolving them in furtherance of U.S. interests," the letter said, implying more money will be transferred to Iran through a taxpayer legal fund coordinated by the Treasury Department.

However, the administration refused to directly answer Pompeo, who is concerned the funds are part of a deal to encourage the release of American prisoners in Iran.

"When Iran releases American hostages, and then, on that same day, President Obama announces he is paying Iran $1.7 billion, Congress of course has to ask the hard questions...The State Department has ducked and dodged–providing a history lesson on international tribunals, focused on actions decades ago, instead of addressing dangerous misdeeds that were potentially just committed. That is suspicious," a source familiar with the congressional inquiry said.

The settlement was independent of negotiations surrounding the Iran nuclear deal, which obligates the U.S. to release $150 billion in frozen assets to the Islamic Republic.