MANHATTAN (CN) — A $25 million campaign to crowdfund a wall on the U.S. southern border fell apart Thursday with the arrest this morning of former White House chief strategist Steve Bannon on a Chinese billionaire’s yacht.
Bannon, 66, pleaded not guilty this afternoon at a brief presentment before U.S. Magistrate Judge Stewart Aaron in Manhattan. Three other executives of the We Build the Wall charity were also charged Thursday with plotting to defraud the donors and launder their money into their own pockets. Bannon, U.S. Air Force veteran Brian Kolfage, venture capitalist Andy Badolato and Timothy Shea each face conspiracy counts that could carry a maximum 40-year sentence.
“To induce donors to donate to the campaign, Kolfage and Bannon — each of whom, as detailed herein, exerted significant control over We Build the Wall — repeatedly and falsely assured the public that Kolfage would ‘not take a penny in salary or compensation’ and that ‘100% of the funds raised … will be used in the execution of our mission and purpose’ because, as Bannon publicly stated, ‘we’re a volunteer organization,’” according to the indictment filed in the Southern District of New York.
“Those representations were false,” it continues.
Acting U.S. Attorney Audrey Strauss said the men defrauded hundreds of thousands of donors in this scheme, with the founder treating himself to a boat, Range Rover and a salary on the pretense that every penny the charity raised would be spent on construction.
“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,” said Strauss, who assumed the position of U.S. attorney earlier this summer after her predecessor Geoffrey Berman’s unexplained and unexpected ouster.
Officials from the U.S. Postal Inspection Service, the law enforcement arm of the politically embattled U.S. Postal Service, reportedly arrested Bannon on a 150-foot yacht off the Eastern coast of Connecticut owned by Chinese billionaire Guo Wengui.
“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,” the agency’s Inspector-in-Charge Philip Bartlett said in a statement.
Authorities say that all four men were arrested this morning. Judge Torres set Bannon’s bond at $5 million, secured by $1.75 million by financially responsible persons. He faces travel restrictions while awaiting trial in the Washington, D.C., area.
President Trump quickly distanced himself from his erstwhile campaign CEO and chief strategist.
“I haven’t been dealing with him for a very long period of time,” Trump told White House reporters, who asked him about the development earlier today.
“I don’t like that project,” Trump added later about We Build the Wall. “I thought it was being done for showboating reasons.”
Insisting this has been Trump’s longtime view of the charity, press secretary Kayleigh McEnany quoted the president’s tweet from July 12 this year.
“I disagreed with doing this very small (tiny) section of wall, in a tricky area, by a private group which raised money by ads,” Trump wrote, quoting a report about federal court scrutiny of this section. “It was only done to make me look bad, and perhsps [sic] it now doesn’t even work. Should have been built like rest of Wall, 500 plus miles.”
The tweet did not mention We Build the Wall by name, which had launched a year and a half earlier. But Trump had been commenting on a ProPublica article about litigation against the charity in Texas, where another U.S. attorney called the private wall a “vanity project” and a “scam.”
I disagreed with doing this very small (tiny) section of wall, in a tricky area, by a private group which raised money by ads. It was only done to make me look bad, and perhsps it now doesn’t even work. Should have been built like rest of Wall, 500 plus miles. https://t.co/L8RUPCAhqc— Donald J. Trump (@realDonaldTrump) July 12, 2020
When launching its GoFundMe page on Dec. 17, 2018, Kolfage originally named his campaign “We the People Build the Wall,” and he told donors their donations would go entirely to construction. The effort raised roughly $17 million in its first week, but questions swirled early on about how a U.S. airman could fundraise for the federal government to take that action.
Weeks after the launch, GoFundMe suspended the campaign and warned that the company would return the $20 million raised to donors unless Kolfage identified a legitimate charity to which the funds could be transferred.
Around that time, prosecutors say, Bannon, Badolato and Shea jumped on board to create We Build the Wall Inc. as a 501(c)(4) organization.
Giving assurances to GoFundMe, the men relaunched their campaign in early 2019, and prosecutors say they tried to persuade their earlier donors to “opt in” to transferring the money to their newly minted nonprofit.
From there, prosecutors say, Kolfage and Bannon funneled the money into their own pockets.
“They did so by using fake invoices and sham ‘vendor’ arrangements, among other ways, to ensure, as Kolfage noted in a text message to Badolato, that his pay arrangement remained ‘confidential’ and kept on a ‘need to know’ basis,” the indictment states.
Prosecutors accuse Kolfage of covertly swiping $350,000 in donations for his personal use, and Bannon of taking more than $1 million to secretly fund the airman’s luxury lifestyle.
“Kolfage then used those funds to pay for his own personal expenses, including, among other purposes, home renovations, payments toward a boat, a luxury SUV, a golf cart, jewelry, cosmetic surgery, personal tax payments, and credit card debt,” the indictment states.
Unveiling physical evidence supporting this alleged deception, prosecutors point to text messages between Kolfage and Badolato.
“Indeed, as Kolfage noted to Badolato in a text message exchange, ‘as far as [the public] knows no one is getting paid’ and ‘salaries will never be disclosed,’” the indictment states.
Prosecutors demand the forfeiture of the vessel, 2019 Jupiter Marine boat named “Warfighter,” as well as a 2018 Land Rover Range Rover that they claim had been purchased from ill-gotten gains.
They also want to seize money held in multiple bank accounts in the names of various entities, including Citizens of the American Republic, Ranch Property Marketing & Management LLC, Freedom Daily LLC, America First Medical LLC, and White Knights & Vultures LLC.