The Justice Department announced on Thursday that Stephen Bannon, President Trump’s former campaign guru and White House aide, had been arrested and charged for his role in a scam to defraud donors to an online campaign to pay for a U.S.-Mexico border wall.
Bannon was one of four men accused of misappropriating funds raised for a $25 million “Build the Wall” campaign started by Brian Kolfage, a disabled Air Force veteran.
According to the Justice Department’s announcement, Bannon and Kolfage each pocketed hundreds of thousands of dollars from the campaign, even though Build the Wall had repeatedly described itself as a “volunteer” operation, while Kolfage assured donors “he would not take a penny in salary or compensation.”
The men have been charged with conspiracy to commit wire fraud and conspiracy to commit money laundering, each of which comes with a maximum 20 year prison sentence.
The indictment is a fall from grace for Kolfage, who had held himself out as a selfless war hero, and for Bannon, a wealthy Washington, D.C., power broker and former Goldman Sachs investment banker who was a key advisor to the President in the early days of Trump’s Administration.
“This case should serve as a warning to other fraudsters that no one is above the law, not even a disabled war veteran or a millionaire political strategist,” said Inspector-in-Charge Philip R. Bartlett of the U.S. Postal Inspection Service.
The case also includes a number of colorful details about how Bannon and Kolfage spent their ill-gotten gains and how they got caught. Here are five of them.
The U.S. Postal Service was key to exposing the scam
In a press release announcing the news, a U.S. Attorney provides special thanks to the United States Postal Inspection Service (USPIS).
The USPIS is the law enforcement arm of the U.S. Postal Service, and conducts investigations related to crimes involving the mail service, as well as to banking and financial fraud. In one recent high-profile case, the USPIS was integral to bringing down the online drug site known as the Silk Road.
The indictment does not provide details about how the USPIS uncovered the Build the Wall fraud, but it does state that a financial institution told Bannon and Kolfage that the campaign was the target of a federal criminal investigation. This suggests the USPIS may have learned of the fraud as a result of suspicious bank transfers.
GoFundMe was suspicious of ‘We Build the Wall’
The indictment does not say which platform the Build the Wall campaign used to raise money, referring only to a “Crowdfunding Website.” But other documents show the site in question was GoFundMe.
According to the indictment, GoFundMe had “concerns” about Kolfage and his plan to give the more than $20 million he had raised to the U.S. Government. As a result, the site suspended the campaign and said it would refund the donations unless Kolfage identified a non-profit that would receive it.
GoFundMe’s concerns in turn led Kolfage to turn to Bannon for help, and the creation of a scheme to reallocate the money to a series of non-profits and shell companies.
The We Build the Wall funds went to a ‘boat called Warfighter’ and other luxury items
The Justice Department says some donors to the Build the Wall campaign told Kolfage they didn’t have much money and distrusted online fundraising. In response, he assured them that 100% of the money would be used for the wall.
In reality, Kolfage went on a shopping spree that included home renovations, a golf cart, a boat, a luxury SUV and plastic surgery. He also used the campaign mailing list to urge donors to buy coffee from a business he was running on the side, saying the coffee sales were the only way he could feed his family.
The Justice Department, as part of its response to the scam, says it seized a series of bank accounts as well as a Land Rover SUV and a “2019 Jupiter Marine boat named Warfighter.” Twitter users recently circulated a photo of what was believed to be the same boat, taken at a recent campaign event for the President.
Bannon paid for fake ‘social media’ services to hide the fraud
Once GoFundMe questioned the group’s plans to give the donations to the U.S. Government, the campaign had to go back to the original donors and ask them to give money to a “We Build the Wall” corporate entity instead. Most of them did so.
In order to get their hands on the funds, Bannon arranged for We Build the Wall to pay invoices to an unnamed non-profit he controlled. That non-profit, as well as other shell entities, made sham payments to the defendants.
In order to conceal the sham payments, Bannon even created 1099 tax forms to pay Kolfage’s wife for “media work,” as well as to document unspecified payments for “social media.”
Bannon and his co-conspirators left a damning trail of text messages
The Build the Wall case is another example of alleged crooks’ text messages coming back to haunt them. According to the indictment, Bannon texted one of his cronies to “send a wire of cash” to the non-profit he controlled, and also texted “no deals I don’t approve.”
Meanwhile, his codefendants sent text messages saying “as far as the public knows, no one is getting paid” and—in relation to the tax obligations that Bannon’s non-profit would incur—”better than you or me lol.”
The Justice Department does not state how it obtained the text messages but, based on previous investigations, it’s likely the agency used a subpoena to obtain them from Apple or another phone maker. The indictment also notes that Bannon and his alleged co-conspirators began using encrypted messaging apps after learning a federal investigation was underway.