Steve Bannon arrested and charged with fraud in connection with ‘We Build The Wall’ online fundraising campaign

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Steve Bannon. AP Photo/Evan Vucci, File
  • Federal prosecutors in the Southern District of New York arrested and charged the former Trump campaign CEO Steve Bannon and three others in a plot to defraud donors out of $US25 million in a fundraising campaign they claimed was launched to fund a border wall.
  • The defendants were charged with conspiracy to commit wire fraud and conspiracy to commit money laundering in the alleged scheme.
  • Bannon was accused of using a non-profit to take more than $US1 million out of the fundraiser to “secretly” pay another co-defendant and cover hundreds of thousands dollars worth of his own expenses.
  • “If the allegations are true, this was straightforward fraud,” Notre Dame Law School professor Lloyd Hitoshi Mayer told Business Insider. “Promise to spend all money raised on the wall to get millions in donations, and then pocket some of the money for yourself. And try to hide that you are doing it.”
  • Trump sought to distance himself from Bannon and said he had no knowledge of the project on Thursday. But in a January 2019 interview, the Trump ally Kris Kobach told reporters he had talked with Trump about the fundraiser and that Trump said it “has my blessing.”
  • Visit Business Insider’s homepage for more stories.

Federal prosecutors in the Southern District of New York charged the former Trump campaign CEO Steve Bannon and three others with fraud in connection to the private “We Build the Wall” fundraising campaign, according to an indictment released on Thursday morning.

Prosecutors said they arrested and charged Bannon, Brian Kolfage, and two others in a plot to defraud donors out of $US25 million in a fundraising campaign they claimed was launched to fund President Donald Trump’s border wall. The defendants were charged with conspiracy to commit wire fraud and conspiracy to commit money laundering in the alleged scheme.

“As alleged, the defendants defrauded hundreds of thousands of donors, capitalising on their interest in funding a border wall to raise millions of dollars, under the false pretense that all of that money would be spent on construction,” Acting Manhattan US Attorney Audrey Strauss said in a statement. “While repeatedly assuring donors that Brian Kolfage, the founder and public face of We Build the Wall, would not be paid a cent, the defendants secretly schemed to pass hundreds of thousands of dollars to Kolfage, which he used to fund his lavish lifestyle.”

Prosecutors alleged that Bannon used a non-profit identified in the charging document as “Non-Profit-1” to take more than $US1 million from the We Build the Wall fundraiser to “secretly” pay Kolfage and cover hundreds of thousands of dollars worth of his own personal expenses.

Strauss’ office also said that Andrew Badolato and Timothy Shea were arrested and charged along with Bannon and Kolfage. Bannon pleaded not guilty on Thursday afternoon and will be out on a $US5 million bond, the terms of which include no travel abroad and no travel on private planes or yachts, like the one he was arrested on, without court approval.

If convicted, the defendants could face up to 20 years in federal prison on the wire fraud and money laundering charges.

The White House press secretary Kayleigh McEnany told pool reporters of Thursday’s development, “As everyone knows, President Trump has no involvement in this project and felt it was only being done in order to showboat, and perhaps raise funds.”

Trump also weighed in on the bombshell development, telling pool reporters, “I feel very badly. I haven’t been dealing with him for a very long period of time. Haven’t been dealing with him at all.”

“Don’t know anything about the project at all,” the president added. “It’s a very sad thing by Mr. Bannon. I don’t like that project.”

Regarding the effort to privately fund a border wall, Trump said, “It was something I very much thought was inappropriate to be doing.”

However, as NBC News’ Geoff Bennett pointed out, the Trump ally and former Kansas secretary of state Kris Kobach said in January 2019 that he had discussed the border wall fundraiser with the president.

“I talked with the president, and the ‘We Build the Wall Effort’ came up,” Kobach told The New York Times. “The president said ‘the project has my blessing, and you can tell the media that.'”

“If the allegations are true, this was straightforward fraud,” Notre Dame Law School professor Lloyd Hitoshi Mayer told Business Insider, referring to charges against Bannon and the other defendants. “Promise to spend all money raised on the wall to get millions in donations, and then pocket some of the money for yourself. And try to hide that you are doing it.”

Thursday’s indictment is particularly noteworthy because in addition to involving yet another high-profile Trump surrogate, it comes following days of upheaval at the Manhattan US attorney’s office earlier this year.

In June, Attorney General William Barr sent shockwaves through Washington when he tried to oust then Manhattan US attorney Geoffrey Berman late on a Friday and replace him with a Trump loyalist. After refusing to resign and engaging in a days-long public standoff with the attorney general, Berman ultimately stepped down when Barr said he would appoint Strauss, who was Berman’s deputy, as acting head of the SDNY.

The SDNY conducted its investigation into the defendants’ alleged scheme in partnership with the United States Postal Inspection Service, whose agents ultimately arrested Bannon.

“As alleged, not only did they lie to donors, they schemed to hide their misappropriation of funds by creating sham invoices and accounts to launder donations and cover up their crimes, showing no regard for the law or the truth,” USPIS Inspector-in-Charge Philip Bartlett said. “This case should serve as a warning to other fraudsters that no one is above the law, not even a disabled war veteran or a millionaire political strategist.”

Building a wall on the US’ southern border to limit illegal immigration was one of Trump’s biggest campaign promises in his 2016 campaign, one that Bannon voiced strong public support for. But the president found it difficult to achieve his pledge after he was elected and had to confront the realities of the legislative process.

Kolfage, a US Air Force veteran and triple amputee who supports Trump, launched the “We Build the Wall” campaign in 2018 on GoFundMe with the goal of raising $US1 billion to built the wall in the absence of congressional funding. The campaign raised millions of dollars within days of its launch.

But in early January of 2019, GoFundMe shut down the fundraiser and refunded donors after it became clear that an official border wall could not be built privately and using private funds.

Upon shutting down the GoFundMe, Kolfage said that he and a team of legal, construction, and national security experts had “spent countless hours over the holidays reviewing all issues pertaining to the construction of a southern border wall” but “have all come to the conclusion that the federal government won’t be able to accept our donations anytime soon,” Insider reported at the time.

Kolfage and his collaborators then encouraged donors to redirect their donations over to a new 501(c)4 non-profit called “We Build the Wall, Inc.” which pledged to continue raising funds for the wall.

At this point, prosecutors said, Kolfage, Bannon, and the other two co-defendants, committed fraud by misleading donors about where, exactly, their money would go.

“In particular, Kolfage covertly took more than $US350,000 in funds that had been donated to We Build the Wall for his personal use while Bannon, through a non-profit organisation under his control (“Non-Profit-1″), received over $US1,000,000 from We Build the Wall, which Bannon used to, among other things, secretly pay Kolfage and cover hundreds of thousands of dollars in Bannon’s personal expenses,” the indictment said.

Bannon left the Trump White House in August 2017 following weeks of turmoil and an increasingly rocky relationship with the president and his inner circle.

An attorney for Bannon and his spokeswoman did not respond to requests for comment from Insider. Bannon also didn’t reply to requests for comment.

Asked for comment on the Bannon indictment, Trump’s personal attorney Jay Sekulow replied via text: “Not my zone.”

Tom LoBianco and Dave Levinthal contributed reporting.