Former White House chief strategist Steve Bannon entered a plea of not guilty on Thursday as he was arraigned on fraud charges in a Manhattan courtroom. Prosecutors alleged that he and his business partners, amputee Vet Brian Kolfage, Andrew Badolato and Timothy Shea, illegally profited from fund-raising for “We Build the Wall.”
All four men were arrested by the United States Postal Inspection Service and charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, and could receive up to 20 years in prison for each count.
This is another big indictment to come from Acting U.S. Attorney Allison Strauss, who was installed in an acting capacity as the Southern District of New York’s lead attorney after her predecessor, Geoffrey Berman, was fired by Attorney General Barr in June. In July, two weeks after she replaced Berman, Strauss charged Ghislaine Maxwell— the alleged procurer for Jeffrey Epstein’s sex ring of underage girls.
Manhattan prosecutors accuse the four of profiting off the fundraising campaign, with Bannon reportedly receiving over $1 million and using it for his personal expenses, and giving hundreds of thousands to Kolfage to fund his reportedly exorbitant lifestyle.
The Department of Justice contends that the four defrauded hundreds of thousands of donors under the guise of building the boarder wall to protect the nation. U.S. Attorney General Bill Barr knew of the indictments in advance of the arrests and that charges would be handed down.
“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,” Strauss said.
In a tweet last month, President Donald Trump referenced a section of wall built by a “private group which raised money by ads” and said “it was only done to make me look bad, and perhaps [sic] it now doesn’t even work. Should have been built like rest of Wall, 500 plus miles.”
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
Bannon will not be held in custody before trial, and the government and his attorney agreed to a $5 million bond secured by $1,750,000 by “financially responsible persons” and travel restrictions between New York, Washington, D.C. and Connecticut, with no international travel allowed.
The defendants are not allowed contact with each other.
CBS reporter Catherine Herridge was the first to break the news to the Twitterverse:
#BannonIndicted He pleaded not guilty. Bond set at $5 million with $1.75 million cash or property to secure with 2 co-signers. Bannon surrenders travel documents. Not allowed to raise/move money from “We Build The Wall” + cannot contact co-defendants. Hearing set 8/31. @CBSNews
— Catherine Herridge (@CBS_Herridge) August 20, 2020
Even though Bannon will not remain in custody as he awaits his August 31 hearing, many commented on the hypocrisy of New York’s “no bail” policy, as Bannon is required to post bail while murderers and rapists are released on New York’s city streets without forfeiting a cent.
According to the 24-page indictment, the crowd-funder represented itself as a volunteer organization and raked in $25 million dollars from donors, some of whom prosecutors allege told Kolfage that they did not have much money and could not afford to donate, but donated anyway because they trusted him.
To convince donors to give money, “Kolfage is alleged to have repeatedly and falsely assured the public that he 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.
“Some of those donors wrote directly to Kolfage that they did not have a lot of money and were skeptical about online fundraising campaigns, but they were giving what they could because they trusted Kolfage would keep his word about how their donations would be spent,” the indictment reads.
Federal prosecutors also say Bannon and the others used the nonprofit and a shell company to hide the payments to Kolfage “by using fake invoices and sham ‘vendor’ arrangements,” as well as other means of keeping the payments quiet. The indictment stated that in order to raise funds, Kolfage and Bannon “repeatedly and falsely” told the public that Kolfage would “not take a penny” in compensation, according to a Fox News report.
Meanwhile, Bannon is also under pressure from another deal gone south, after a report in the Wall Street Journal claimed an FBI and SEC investigation into a $300 million cash raise in a private placement for GTV Media, “the only uncensored and independent bridge between China and the Western World,” with a team including Chinese dissident businessmen Guo Wengui and a Morgan Stanley heir. Accredited investors complained that they were missing documentation, but the company said all the funds are still in tact.
Others involved in the “We Build the Wall” project are former Kansas secretary of state Kris Kobach, Sheriff David Clarke and Curt Schilling, none of whom were mentioned in the indictment, according to CBS News.
The Southern District of New York is not without skeletons rattling around in its closet and the case against Bannon and Kolfage is being considered on its merits as well as the damage it could do the Republican party in an election year.
The National Rifle Association is also currently in the SDNY’s crosshairs. On August 6th, Attorney General of New York Letitia James announced action to dissolve the National Rifle Association after an 18-month investigation found evidence the powerful gun rights group is “fraught with fraud and abuse.”
In a lawsuit filed by James, she claims that she found financial misconduct in the millions of dollars and the suit alleges that top NRA executives misused charitable funds for personal gain, awarded contracts to friends and family members, and provided contracts to former employees to ensure loyalty.
James’ purview gives her a wide range of authority in New York, including forcing organizations to cease operations within the state.
“The NRA’s influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets,” James said in a statement. “The NRA is fraught with fraud and abuse, which is why, today, we seek to dissolve the NRA, because no organization is above the law.”
NRA executives named in James’ complaint include: Executive Vice President Wayne LaPierre, general counsel John Frazer, former Chief Financial Officer Woody Phillips and former chief of staff Joshua Powell.
The NRA released a statement calling James’ legal action “political” and that it was an attack on the organization and the Second Amendment freedoms it fights to defend.
“We not only will not shrink from this fight – we will confront it and prevail,” their statement reads.