Steve Bannon, an architect of Donald Trump's 2016 presidential election victory, has been charged along with three associates with defrauding Trump supporters in a campaign to help build the president's signature wall along the US-Mexico border, prosecutors said on Thursday.
The organizers of the "We Build The Wall" group portrayed themselves as eager to help the president build a "big beautiful" barrier along the US-Mexico border, as he had promised during the 2016 campaign. They raised more than $25 million from thousands of donors, using their ties to Trump to build legitimacy, and pledged that 100% of the money would be used for the project.
But according to the criminal charges unsealed Thursday, little of the money actually went to the wall. Instead, it was used to line the pockets of group members, including Bannon, who served in Trump's White House and worked for his campaign. He allegedly took over $1 million, using some to secretly pay co-defendant Brian Kolfage, the founder of the project, and to cover hundreds of thousands of dollars in personal expenses.
Bannon, his spokeswoman and an attorney did not immediately respond to requests for comment Thursday, nor did Kolfage.
Other prominent members of the group included former Kansas Secretary of State Kris Kobach, its general counsel; Erik Prince, founder of the controversial security firm Blackwater; former Republican Rep. Tom Tancredo of Colorado; and former major league baseball pitcher Curtis Schilling. They were not named in the indictment.
The arrests make Bannon the latest in a list of former Trump associates who have been prosecuted, including his former campaign chair, Paul Manafort, his longtime lawyer, Michael Cohen, and his former national security adviser, Michael Flynn.
Bannon was taken into custody on a 150-foot yacht off the coast of Connecticut by the postal inspection service, authorities said.
Trump quickly distanced himself from Bannon. "I haven't been dealing with him for a long period of time," he said Thursday. The president said he felt "very badly" about the situation.
"I think it's a very sad thing for Mr. Bannon, and I think it's surprising," he told reporters at the White House, adding that he knew nothing about the project and never believed in a privately financed barrier.
"When I read about it, I didn't like it. I said this is for government, this isn't for private people. And it sounded to me like showboating," he said.
Trump tweeted in July that he "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 perhaps it now doesn't even work. Should have been built like rest of Wall, 500 plus miles," he said.
White House spokeswoman Kayleigh McEnany also weighed in, saying 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."
According to the indictment, the defendants used fake invoices and sham vendor arrangements to try to hide their efforts. Under the arrangement, Bannon and his co-defendants allegedly paid Kolfage $100,000 up front and an additional $20,000 monthly. Kolfag claimed he was not paid.
The indictment said Kolfage "went so far as to send mass emails to his donors asking them to purchase coffee from his unrelated business, telling donors the coffee company was the only way he 'keeps his family fed and a roof over their head.'"
Some donors wrote directly to Kolfage saying they did not have a lot of money and were skeptical of online fundraising campaigns, the indictment said. Kolfage would reassure the donors that nobody was being compensated, according to the indictment.
Kolfage eventually spent some of the over $350,000 he received on home renovations, payments toward a boat, a luxury SUV, a golf cart, jewelry, cosmetic surgery, personal tax payments and credit card debt.
The defendants learned last October from a financial institution that the group may have been under federal criminal investigation and took additional steps to conceal the fraud, it said.
Charges included conspiracy to commit wire fraud and conspiracy to commit money laundering.
A phone at the office of Bannon's lawyer went unanswered Thursday. It was not immediately clear who would represent Kolfage at an initial court appearance, and his phone was unanswered.
We Build the Wall, launched on Dec. 17, 2018, originally promoted a project for 3 miles of fence posts in South Texas that was ultimately built and largely funded by Fisher Industries, which has received about $2 billion in funding for wall contracts. The company's CEO, Tommy Fisher, did not respond to calls for comment.
In 2019, Kolfage and Fisher successfully constructed a half-mile of bollard-style border fence on privately donated land in New Mexico near of El Paso, Texas. We Build The Wall used early construction to raise more cash and more private land donations in along border states.
Construction faced resistance from local authorities in New Mexico and Texas and drew accusations of improper permitting. In May, federal officials found that a section of Fisher's privately funded wall violated flood construction standards along the Rio Grande. It also caused erosion.
Dustin Stockton, who helped start the campaign then left the project to work on the upcoming presidential election, said it seemed clear that federal prosecutors were "attacking political infrastructure that supports President Trump right before the election."
He could not comment on the specific charges yet. He was not charged in the case.
Bannon led the conservative Breitbart News before being tapped to serve as chief executive officer of Trump's campaign in its critical final months, when he pushed a scorched earth strategy that included highlighting the stories of former President Bill Clinton's accusers. After the election, he served as chief strategist during the turbulent early months of Trump's administration.
The combative Bannon was the voice of nationalist, outsider conservatism, and he pushed Trump to follow through on some of his most contentious campaign promises, including his travel ban on several majority-Muslim countries. But Bannon also clashed with other top advisers, and his high profile sometimes irked Trump. He was pushed out in August 2017.
Bannon, who served in the Navy and worked as an investment banker at Goldman Sachs before becoming a Hollywood producer, has been hosting a pro-Trump podcast called "War Room" that began during the president's impeachment proceedings and has continued during the pandemic.
A day before the indictment was unsealed, Kolfage was interviewed by Bannon on Bannon's "War Room" podcast. He discussed a dispute with a fundraising platform and encouraged future donors to go straight to their website.
Bannon asked him whether he thought the wall could get built for Trump to fulfill his campaign promise.
"I think we stand in a pretty good spot, as long as he gets elected," Kolfage said.
By Larry Neumeister, Colleen Long and Jill Colvin/AP