Steve Bannon, a former top aide to President Donald Trump, and Brian Kolfage, the leader of the crowdfunded "We Build the Wall" effort, have been charged with conspiracy to commit wire fraud and money laundering, federal prosecutors said Thursday.
Bannon, Kolfage, and two other men "received hundreds of thousands of dollars in donor funds from We Build the Wall, which they each used in a manner inconsistent with the organization’s public representations," said Audrey Strauss, the acting United States Attorney for the Southern District of New York.
Bannon, Kolfage, Andrew Badolato, and Timothy Shea have all been arrested and are expected to appear in court on Thursday.
White House press secretary Kayleigh McEnany said in a statement that "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 himself told reporters when asked about Bannon Thursday morning that while he feels "very badly," he hasn't "been dealing with him for a very long period of time" and that he did not like the "We Build the Wall" project. Donald Trump Jr. visited the project in 2019, the Texas Tribune reported.
Last year, Kris Kobach, a Trump ally and supporter of the wall project, told the New York Times that he had talked with Trump about the effort and that "the president said ‘the project has my blessing, and you can tell the media that.’"
Kolfage "covertly took more than $350,000 in funds that has been donated to 'We Build the Wall' for his personal use," the criminal complaint said.
Through a nonprofit he controlled, Bannon "received over $1,000,000 from We Build the Wall, which Bannon used to, among other things, secretly pay Kolfage and to cover hundreds of thousands of dollars in Bannon's personal expenses," the complaint said.
According to court documents, the four men used Bannon's nonprofit and a shell company, along with fake invoices and vendor arrangements, to conceal the scheme. In a text message, Kolfage allegedly said the financial arrangement needed to stay "confidential" and on a "need to know" basis.
Suspicions about the fundraising campaign arose quickly after it raised more than $17 million in its first week on GoFundMe, the documents state. GoFundMe suspended the campaign, saying its organizers would need to identify a legitimate nonprofit that the money was going to, or the funds would be returned to donors.
The men then turned the campaign into a 501(c)(4) nonprofit called "We Build the Wall Inc." to transfer the money to, and then continued fundraising.
Central to the campaign's claims were that its founder would "take no salary" and "personally not take a penny of compensation from these donations," according to the court documents.
In social media posts and emails to donors, they repeatedly made this claim, telling supporters "100% of your donations” would fund the building of a border wall, and that they would “refund every single penny” if they could not achieve their goal.
“I made a promise that I would NEVER take a penny 100% of fundraising through @gofundme donations will only go towards the wall,” Kolfage wrote in tweet cited in the court documents. “100% means 100% right? Board won’t see any of that money!”
Bannon confirmed this, stating at We Build the Wall events and in interviews that he “did this kind of as a volunteer” and that “we’re a volunteer organization.”
The supposed lack of self-serving was apparently noted and praised by donors, who said it was why they chose to contribute.
“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 documents state. When potential donors shared concerns about the campaign, Kolfage responded to them directly, “assuring the donors in private messages that he was not being compensated.”
Kolfage even emailed donors asking them to buy coffee from another one of his companies, saying in a mass email that it was how "he keeps his family fed and a roof over their head," the documents state.
In reality, Kolfage, Bannon, and the other two men were using the money to fund their lavish lifestyles.
Kolfage allegedly spent his money on "home renovations, payments toward a boat, a luxury SUV, a golf cart, jewelry, cosmetic surgery, personal tax payments, and credit card debt." Bannon and the other two spent on "travel, hotels, consumer goods, and personal credit card debts."
The four men found out they would potentially be subjected to a criminal investigation in October 2019, at which point they allegedly "took additional steps to conceal the fraudulent scheme."
Weeks and days before the federal indictment was made, Kolfage had been making several moves involving various GoFundMe campaigns.
Sometime in July, a campaign that Kolfage had started to help mentor veterans in military hospitals was suddenly reopened.
BuzzFeed News reported in January 2019 that despite Kolfage's claims that his program worked with military hospitals such as Walter Reed, Brooke Army Medical Center, and Landstuhl Regional Medical Center in Germany, all three medical centers said they had no record of any mentoring program or that Kolfage had worked with patients there.
Last month, Kolfage reached out to a BuzzFeed News reporter requesting a correction on the story, which had been published more than 18 months earlier. Kolfage said the funds raised in the campaign “were 100% raised for my travel” and called it “crappy reporting.” BuzzFeed News declined the request.
Kolfage also announced on Tuesday that he had shut down the We Build the Wall campaign on GoFundMe — the largest campaign effort in GoFundMe history — and moved it to Fundrazr.com.
The move came a day after Kolfage started a fundraising campaign on GoFundMe to fund a civil lawsuit against organizers of the Black Lives Matter movement and several sports leagues, including the NFL, NBA, MLB, and NHL, for taking a stand in support of the movement.
They started using encrypted messaging apps, and mentions on the website about Kolfage not financially benefiting from the campaign were removed and replaced with a line that "he would be paid a salary starting in January 2020."
Badolato, who is from Sarasota, Florida, is a longtime Bannon associate with a criminal history, the Herald-Tribune reported in 2018, and was alleged to have borrowed money from the mob in 2008.
Shea is from Castle Rock, Colorado, the Colorado Sun reported. Shea owned the PO box where donations were sent, he said to 9News in 2018, telling the outlet he had met Kolfage three years prior and once formed a right-wing news website with him. He said did “a lot of the backend stuff” for We Build the Wall. (Not to be confused with Timothy Shea, the Acting Administrator of the Drug Enforcement Administration and former federal prosecutor.)
Dustin Stockton, one of the founders of We Build the Wall, told BuzzFeed News over Twitter direct messages that he and his partner, We Build the Wall communications director Jennifer Lawrence, were served with warrants for their phones and grand jury subpoenas early Thursday morning by agents identifying themselves as acting on behalf of the Southern District of New York.
"In the predawn, heavily armed federal agents served Jennifer Lawrence and I with warrants for our cell phones and subpoenas to appear before a grand jury," Stockton wrote. "We were in our RV in Mesquite Nevada. They said it was out of SDNY. They took both of our cell phones and nothing else."
Lawrence still works for the group, while Stockton said he left after the group's project erecting a piece of wall in Sunland Park, New Mexico, last year. Stockton declined to comment on the specifics of the allegations against the group beyond saying that he and Lawrence "remain extremely proud that we were able to deliver a segment of wall for all the people who donated to WBTW with the project in Sunland Park" and are "skeptical of the timing of the allegations." He said that to his knowledge neither he nor Lawrence had been indicted, and they are expected to appear before a grand jury on Sept. 3.
Before his arrest, Bannon had been at sea on a boat since May, recently sailing off the East Coast. He has cohosted his War Room: Pandemic podcast from the boat.
US Postal Service agents took Bannon into custody on a boat off the coast of Westbrook, Connecticut, a spokesperson told BuzzFeed News.
The situation is a sharp reversal from this time four years ago, when Bannon left his role overseeing Breitbart News to take charge of the 2016 Trump campaign as its chief executive.
Bannon’s involvement in the “We Build the Wall” group is not the only project he is connected to that has faced scrutiny from investigators. The Wall Street Journal reported this week that the FBI and Securities and Exchange Commission and the New York State attorney general are investigating GTV Media, a company connected to Bannon and to Guo Wengui, a Chinese dissident billionaire with whom Bannon has a close relationship. The probe reportedly centers around $300 million that Bannon and Guo raised for the company earlier this year.
On Thursday morning, Bannon didn’t respond to text messages about his arrest. A spokesperson for Bannon didn’t immediately respond to requests for comment. Bannon’s War Room: Pandemic podcast livestreamed as usual, cohosted by Raheem Kassam and Jack Maxey, but with no mention of Bannon’s arrest. After a commercial break, an announcer still said, “This is your host, Stephen K. Bannon."
Bannon entered a plea of not guilty in his first court appearance in the matter, which took place at 4 p.m. in New York’s federal courthouse and was conducted partially over video and audio due to the coronavirus.
The judge overseeing the proceeding signed off on Bannon’s pre-trial release on conditions prosecutors and Bannon’s lawyers had agreed to, including a $5 million bond secured by $1.75 million in cash or real property co-signed by two “financially responsible persons.” Bannon is also barred from international travel, traveling on private jets or yachts without the court’s permission, and leaving the areas between his home in Washington, DC, and the Southern District of New York.
Shea was ordered released on a $250,000 bond, but barred from traveling outside Colorado where he lives before his arraignment on Aug. 31.
In response to the charges on Thursday, Kate Bedingfield, Joe Biden's deputy campaign manager, told reporters, "No one needed a federal indictment to know that Steve Bannon is a fraud."
"Donald Trump has run the most corrupt administration in American history," she said. "He has consistently used his office to enrich himself, his family, and his cronies, so is it really any surprise that yet another one of the grifters he surrounded himself with and placed in the highest levels of government was just indicted? Sadly, it is not. And look, I think the American people deserve better."
GoFundMe spokesperson Bobby Whithorne said on Thursday that the company "has a zero tolerance policy for fraudulent behavior" and that it is "cooperating with law enforcement officials throughout their investigation."