Steve Bannon, the former adviser to US president Donald Trump, has been charged with defrauding hundreds of thousands of people who donated to a crowdfunding campaign to raise money for a wall along the US-Mexico border.
Mr Bannon, 66, one of the architects of Mr Trump’s 2016 election victory and a champion of nationalist leaders around the world, was arrested by postal inspectors on Thursday morning along with three others involved in the “We Build the Wall” crowdfunding campaign. The justice department said he was arrested on a boat in the Long Island Sound off the coast of eastern Connecticut.
Mr Bannon pleaded not guilty to the charges during a hearing on Thursday. Bail has been set at $5m. His travel will be restricted to the New York and Washington metropolitan areas, and he will not be permitted to board any private plane, boat or private yacht without permission.
The campaign to build the wall raised more than $25m, which its leaders told donors would be sent to the federal government to help pay for the construction of a wall along the southern border of the US — a cornerstone pledge from Mr Trump’s 2016 campaign.
Prosecutors alleged that Mr Bannon and the other defendants — Brian Kolfage, Andrew Badolato and Timothy Shea — instead plotted to divert hundreds of thousands of dollars for their own benefit.
Audrey Strauss, the acting US attorney for the southern district of New York, said: “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.”
Speaking shortly after the arrests were announced, Mr Trump attempted to distance himself from Mr Bannon and his project. “I haven’t been dealing with him for a very long period of time, haven’t been dealing with him at all,” the president said. “It’s a very sad thing by Mr Bannon.”
Despite initially saying he did not know anything about the project, Mr Trump said: “I don’t like that project. I thought it was being done for showboating reasons.”
The White House said: “President Trump has not been involved with Steve Bannon since the campaign and the early part of the administration, and he does not know the people involved with this project.” Mr Bannon left the White House in August 2017, less than a year after Mr Trump was elected.
Mr Bannon is the latest Trump associate to face criminal charges since the 2016 campaign. They are Roger Stone, a Republican operative and longtime confidant of the president; Michael Cohen, his former lawyer; Paul Manafort, his former campaign chairman; George Papadopoulos, a former campaign adviser; Rick Gates, former deputy campaign chairman; and Michael Flynn, who was briefly Mr Trump’s national security adviser.
Mr Kolfage, a military veteran and triple amputee, began crowdfunding in December 2018, as Congress blocked Mr Trump’s request for funds to build a wall across the entire length of the US-Mexico border. Mr Kolfage said he wanted to raise $1bn, and within the first week, had managed to raise $17m.
On his page on the crowdfunding website GoFundMe, Mr Kolfage promised that 100 per cent of the money would go towards building a wall, and that if the campaign was unsuccessful, “every single penny” would be returned to the donors.
But Mr Kolfage and his pledge to send the money to the federal government drew scrutiny, and later that month, GoFundMe suspended the campaign — which had by that point raised more than $20m — until Mr Kolfage could identify a legitimate non-profit organisation in which to place the funds.
Mr Kolfage, along with Mr Bannon and Mr Badolato, a longtime associate of Mr Bannon who describes himself as an entrepreneur, then formed an organisation they called We Build the Wall.
The three defendants, along with a fourth, Mr Shea, promised donors publicly and privately that all the money would be used to build a wall, and that Mr Kolfage in particular would not profit “even a penny” from the organisation.
Most donors to the GoFundMe page agreed that their funds should be transferred to the new non-profit organisation, which continued to raise money during 2019.
A website for We Build the Wall lists other Trump allies on its advisory board, including Erik Prince, the founder of the private security company Blackwater, and Kris Kobach, who earlier this month lost the Republican primary for the US Senate in Kansas. Mr Kobach told the New York Times last year that We Build the Wall had the president's “blessing”.
Prosecutors said Mr Kolfage had agreed with Mr Bannon and Mr Badolato that Mr Kolfage should receive “$100k up front [and] then 20 [per] month”.
In an attempt to conceal that money, they said, some of the funds were paid via a third-party non-profit organisation controlled by Mr Bannon into the account of Mr Kolfage’s wife. Other money came through a shell company incorporated by Mr Shea, whom the justice department said had been involved in the crowdfunding efforts from an early stage.
The indictment against the four men said Mr Kolfage used the money to pay for personal expenses including home renovations, payments towards a boat, a luxury car and cosmetic surgery.
It added that Mr Bannon, Mr Badolato and Mr Shea also used some of the money siphoned off from donors to cover their own personal expenses including travel, hotel costs and credit card bills.
Prosecutors alleged that a non-profit controlled by Mr Bannon took $1m from We Build the Wall, some of which was used to pay Mr Kolfage, but a “substantial portion” of which went to Mr Bannon to pay for things unrelated to the wall.
In October 2019, according to the indictment, the defendants learnt that We Build the Wall might be under a criminal investigation, and subsequently changed the wording of the campaign’s website to say Mr Kolfage would receive a salary. They allegedly began using encrypted messaging apps and stopped the secret payments to Mr Kolfage.
The four men have each been charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, each of which carries a maximum penalty of 20 years in prison.
Mr Bannon and Mr Kolfage did not respond to a request for comment on Thursday while Mr Badolato and Mr Shea could not be reached.
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