Stephen K. Bannon, whom former President Donald J. Trump pardoned, has been entangled in what prosecutors have said was a crowdfunding fraud scheme.
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Stephen K. Bannon, the self-professed populist adviser to former President Donald J. Trump, was accused by Manhattan prosecutors on Thursday of defrauding Americans who wanted to contribute to construction of a southern border wall, resurrecting a threat that Mr. Bannon seemed to have escaped with a 2021 presidential pardon.
The prosecutors said that Mr. Bannon, after a run as Mr. Trump’s campaign chief and a White House official, played an integral role in an organization known as We Build the Wall Inc. The group, whose president and most visible representative was a wounded veteran of the Iraq war, reaped millions through internet appeals, pledging to make the symbol of Mr. Trump’s successful 2016 campaign a reality.
Instead, prosecutors said, Mr. Bannon funneled more than $100,000 in donations to the organization’s president, Brian Kolfage, who had repeatedly promised not to take a salary. And New York’s attorney general, Letitia James, said that while Mr. Bannon had represented himself as a patriotic volunteer fighting for ordinary citizens, he too had personally profited.
Mr. Bannon was charged by the Manhattan district attorney, Alvin L. Bragg, with two felony counts of money laundering, two felony counts of conspiracy and one felony count of a scheme to defraud, and could face a maximum sentence of five to 15 years on the most serious charge.
He was federally charged in relation to his activities with We Build the Wall Inc. in 2020, but because he was pardoned by Mr. Trump before he went to trial, the Constitution’s prohibition on facing the same charges twice did not bar the indictment. Donors to the nonprofit included hundreds of Manhattan residents, prosecutors said Thursday.
Ms. James, a Democrat whose office also worked on the case, said at a Thursday afternoon news conference that Mr. Bannon had taken advantage of people who had donated earnestly.
“Regular, everyday Americans play by these rules, and yet too often powerful political interests, they ignore these rules,” she said. “They think they are above the law, and the most egregious of them take advantage.”
Mr. Bragg, a Democrat, said, “In Manhattan and in New York, you will be held accountable for defrauding donors.”
Mr. Bannon, who in July was convicted of two counts of contempt of Congress after refusing to comply with a subpoena from the congressional committee investigating the Jan. 6 attack on the Capitol, appeared relaxed and confident in an appearance in State Supreme Court in Manhattan, where he pleaded not guilty. He was led through a hallway in handcuffs as reporters and photographers looked on. Asked about the accusations after the proceeding, he said, “It’s all nonsense. They will never shut me up.”
“Mr. Bannon is intending to fight these charges all the way through,” said one of his lawyers, David Schoen. “He is not guilty of anything that he’s charged with or of any crime.”
We Build the Wall began as a GoFundMe page started by Mr. Kolfage, who lost his legs and an arm in Iraq. Conservative activists, including Mr. Trump’s oldest son, Donald Trump Jr., appeared at an event for the group, which ultimately brought in $25 million in donations.
By the following year, Mr. Kolfage said he had raised $20 million from about 339,000 people and set up the nonprofit to continue collecting funds. The scheme to defraud donors began soon afterward, prosecutors said.
Thursday’s state indictment, which charged the nonprofit with the same crimes as Mr. Bannon, did not say how much Mr. Bannon personally pocketed. But evidence in the federal trial of one of the group’s founders this year showed that $380,000 was transferred to a nonprofit controlled by Mr. Bannon in 2019.
Hundreds of thousands then went to Mr. Kolfage, the organization’s president, and to Mr. Bannon, prosecutors showed. In February and March of 2019, more than $330,000 was transferred from Mr. Bannon’s nonprofit’s bank account to Mr. Bannon himself.
American politics has been supercharged by looser constraints on spending and by the internet, which enabled campaigns and causes to raise millions with broad and instantaneous appeals.
Republican lawmakers and right-wing broadcasters, as well as Mr. Trump’s supporters, family members and associates, have used his name to raise funds, sell collectible coins and merchandise and support his signature causes, often drawing support from legions of small-dollar donors.
Capitalizing on a president’s popularity to make or raise money is nothing new — nor partisan. Neither are accusations of moneymaking in politics. But with several endeavors launched by those in Mr. Trump’s orbit, prosecutors have argued that donations were not put to their purported use and instead enriched the organizers.
A federal grand jury is investigating the formation, fund-raising and spending of a political action committee created by Mr. Trump, which raised millions of dollars to support his efforts to contest the results of the 2020 election.
Earlier this year, the attorney general in Washington, D.C., said Mr. Trump’s inaugural committee and business would pay $750,000 to resolve a lawsuit claiming the Trump Organization misused nonprofit funds intended for the 2017 inauguration. The lawsuit, originally filed in 2020, said inaugural organizers had used the money raised from donors, intended for inaugural events, to enrich the Trump family.
In at least one other case, donors themselves have cried foul — as in the operation set up by Mr. Trump’s 2020 election campaign, in which supporters unknowingly opted into making recurring online donations.
The federal case against Build the Wall included allegations similar to those laid out in Thursday’s state indictment. In August 2020, the U.S. attorney’s office in Manhattan charged Mr. Bannon, Mr. Kolfage and two other men — Andrew Badolato and Timothy Shea.
Mr. Trump pardoned Mr. Bannon just hours before leaving office, leaving the other three men to face the charges without their most well-known collaborator.
In April, Mr. Kolfage and Mr. Badolato pleaded guilty. Mr. Shea went to trial in May, and a federal judge declared a mistrial when jurors could not reach an agreement. Both Mr. Kolfage and Mr. Badolato are mentioned in the state indictment as unindicted co-conspirators. Mr. Shea, who will be retried later this year, does not appear.
Mr. Bragg’s predecessor, Cyrus R. Vance Jr., made a point of charging associates of Mr. Trump who had been also been charged with federal crimes — in case the then-president pardoned his associates. In an interview before leaving office in December, Mr. Vance said he was seeking to “vindicate New York’s interests in these cases where people had committed crimes but were let off the hook.”
Mr. Vance, who initiated the office’s long-running investigation into Mr. Trump himself, in 2019 also charged Paul J. Manafort, his former campaign chairman, with mortgage fraud and more than a dozen other felonies.
Mr. Manafort had already been convicted of federal crimes in 2018, but Mr. Vance wanted to ensure that Mr. Manafort would still face consequences were he pardoned. But the charges were successfully challenged on double-jeopardy grounds, and Mr. Manafort ultimately was pardoned by Mr. Trump.
Until 2019, New York had barred state prosecutors from bringing cases against those who had already been federally charged for the same crimes. That year, in response to investigations surrounding Mr. Trump and his associates, the State Legislature explicitly allowed the prosecution of those who had received presidential pardons.
In the following years, Mr. Vance began investigations into two other pardoned Trump associates: Ken Kurson, a close friend of Jared Kushner, Mr. Trump’s son-in-law, and Mr. Bannon. Early this year, Mr. Kurson reached a plea deal with prosecutors after having been charged with eavesdropping and computer trespass.
It is unclear whether Mr. Bannon will also reach a deal. He vowed several times on Thursday to fight the case, claiming — as Mr. Trump often does — that the charges amounted to a political conspiracy against him.
Dana Rubinstein and Téa Kvetenadze contributed reporting.
Steve Bannon Pleads Not Guilty to Fraud Border Wall Case in N.Y. – The New York Times