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Steve Bannon is arrested and charged with fraud by federal prosecutors

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VIDEO | 00:44
Stephen K. Bannon is arrested and charged with fraud by federal prosecutors

Former Trump strategist Stephen K. Bannon and three others are accused of diverting hundreds of thousands of dollars from a group called We Build the Wall.

Stephen K. Bannon, who guided President Trump’s 2016 campaign in its final months and served as a senior White House advisor, was charged Thursday in New York with fraud for his role in an online fundraising scheme, We Build the Wall, which raised $25 million.

Bannon and three associates each diverted hundreds of thousands of dollars from the group, which they formed ostensibly to raise private funds for the southern border wall that Trump wants, and used the money in part to cover personal expenses, according to an indictment unsealed Thursday by federal prosecutors in Manhattan.

All four men were arrested Thursday morning and appeared in separate federal courts later in the day. Bannon, 66, entered a not-guilty plea in Manhattan and was released on bond. Leaving the courthouse, he smiled at reporters and said, “This entire fiasco is to stop people who want to build the wall.” Earlier he’d been arrested off Connecticut aboard a $28-million yacht owned by a dissident Chinese billionaire, with whom Bannon has lately been doing business.

The defendants “defrauded hundreds of thousands of donors, capitalizing on their interest in funding a border wall to raise millions of dollars, under the false pretense that all of that money would be spent on construction,” Audrey Strauss, the acting U.S. attorney for the Southern District of New York, said in a statement.

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With the indictment, which comes less than three months ahead of the November election, Bannon becomes the seventh prominent Trump associate to be charged with a federal crime. The others include his former campaign chairman and deputy campaign manager, national security advisor, personal lawyer, a foreign-policy advisor and his longtime political advisor.

Bannon, credited with sharpening Trump’s successful nationalistic appeal to a political base of aggrieved working-class white voters late in the 2016 campaign, is alleged to have “received over $1,000,000 from We Build the Wall,” some of which he used to “cover hundreds of thousands of dollars of personal expenses,” according to the indictment.

A spokesperson for Bannon did not immediately respond to a request for comment.

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Trump, questioned about the indictments by reporters at the White House on Thursday morning, expressed sadness over Bannon’s arrest while trying to distance himself from the scheme itself.

“I feel very badly,” Trump said. “I haven’t been dealing with him for a very long period of time.”

That statement contradicted numerous campaign aides, who have privately acknowledged that the two have been in touch of late about Trump’s reelection effort. Also, Trump praised Bannon in a Fox News interview last month, and acknowledged that Bannon and other strategists without formal roles on his campaign nonetheless were “all involved.”

In a separate statement, White House Press Secretary Kayleigh McEnany said that 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.”

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Several Trump associates were involved in the We Build the Wall enterprise, including some of the nation’s most vehemently restrictionist immigration hawks, who lent their names to the group as it sought contributions from people eager to see the border wall built. Former Kansas Secretary of State Kris Kobach, former Milwaukee County Sheriff David Clarke, former Colorado Rep. Tom Tancredo and former Boston Red Sox pitcher Curt Schilling were all part of the group’s advisory board, their pictures featured on its website. Trump’s son, Donald Trump Jr., also lent his name to the fundraising effort at one point.

According to the indictment, Bannon and the three other defendants — Brian Kolfage, Andrew Badolato and Timothy Shea — used the online site to induce donors to contribute to the construction of a border wall, claiming — falsely — that “100% of your donations” would go to the federal government to expedite the project and that they “would not take a penny in salary or compensation.”

The government cited text messages among the defendants discussing how such language would encourage donations, alleging that they sought to hide payments to themselves by funneling them through third-party entities controlled by Bannon and Shea.

Although some money was directed to private contractors, including one building a short segment of border wall on private land in Texas, the four defendants each used proceeds for “a variety of personal expenses, including, among other things, travel, hotels, consumer goods and personal credit card debts,” according to the indictment.

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Kobach claimed last year that Trump himself had blessed the fundraising project, telling the New York Times: “The president said, ‘The project has my blessing, and you can tell the media that.’”

Trump painted a different picture for reporters after Bannon’s arrest, saying, “I don’t like that project. I thought it was being done for showboating reasons.” He said that the group’s advertising for contributions to build the wall “was something I very much thought was inappropriate to be doing.”

McEnany pointed to a tweet that Trump posted last month disparaging the project following a report that the privately funded wall segment was already deteriorating. Trump stated 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,” and suggesting that it “was only done to make me look bad, and perhaps it now doesn’t even work.”

The indictment comes just two months after Atty. Gen. William Barr unsuccessfully sought to install a Trump administration official as the chief prosecutor in New York’s Southern District. Strauss previously served there as the deputy U.S. attorney under Geoffrey S. Berman, whom Barr removed in June as Berman’s office was pushing ahead with multiple investigations involving the president.

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Barr sought to replace Berman with Jay Clayton, the current chair of the Securities and Exchange Commission. Berman resisted his dismissal and only resigned after making sure that Strauss would take over for him until the Senate had confirmed Clayton.

Barr’s action in that instance was one of a number of interventions by him and the Justice Department in the previous legal cases that snared Trump associates.

Last month Trump commuted the sentence of Roger Stone, an outside advisor and self-proclaimed political dirty trickster, who was convicted last year and sentenced to 40 months in prison for lying to Congress about his coordination with WikiLeaks about its publication of damaging emails about Hillary Clinton during the 2016 campaign.

The Justice Department in May moved to drop charges against retired three-star Gen. Michael Flynn, Trump’s first national security advisor, though Flynn had pleaded guilty in late 2017 to lying to the FBI. The judge in that case is contesting the action in court.

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Paul Manafort, Trump’s 2016 campaign chairman, was sentenced to more than seven years in prison in March 2019 after being convicted of bank and tax fraud related to his work as a political consultant in Ukraine. Richard Gates, Manafort’s deputy on the Trump campaign, pleaded guilty to tax fraud in 2018 and served a reduced sentence after cooperating with federal officials in multiple investigations.

Michael Cohen, Trump’s longtime personal lawyer and fixer, has served part of a three-year sentence for tax evasion, bank fraud, lying to Congress and campaign finance violations.

The campaign of former Vice President Joe Biden, who will formally accept the Democratic presidential nomination in Wilmington, Del., on Thursday night, said Bannon’s alleged corruption came as little surprise.

“Donald Trump has run the most corrupt administration in American history,” said Kate Bedingfield, a campaign spokeswoman. “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?”

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When a reporter at the White House asked Trump directly about a “culture of lawlessness” around him, and named Trump’s associates who’d been convicted of federal crimes, the president deflected with a baseless statement against his predecessor. “There was great lawlessness in the Obama administration,” he said. “They had tremendous lawlessness.”


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