• Josh Galemore / Arizona Daily Star

An August, 2020, heatwave continued into a second week in Tucson and throughout Arizona. Tucson broke a record with a high temperature of 111-degrees. Most days bounce around from 106-109, with little monsoon rain to cool the afternoons. Video by Josh Galemore / Arizona Daily Star

Three days after a 2019 fundraiser in Sahuarita in which Steve Bannon declared β€œ100%” of donations would be used for a privately funded border wall, the former advisor to President Trump started illegally siphoning off more than $1 million, federal prosecutors said Thursday.

At the Sahuarita event on Feb. 8, 2019, Bannon told the Star that β€œ100% of this money is going to build the wall and the legal fight” to get the wall built.

Instead, Bannon pulled $100,000 from the donations on Feb. 11 to β€œsecretly pay” former Tucsonan Brian Kolfage, the head of the fundraising campaign who had pledged he wouldn’t take a penny of the $25 million raised from hundreds of thousands of donors.

In the following months, Bannon illegally pulled out more than $1 million of donated money, including $350,000 paid to Kolfage, federal prosecutors in New York said Thursday.

Kolfage eventually used some of the 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 was taken into custody on Thursday by the U.S. Postal Inspection Service on a 150-foot luxury yacht called Lady May off the coast of Connecticut, authorities said. The vessel is owned by exiled Chinese billionaire Guo Wengui and currently for sale for nearly $28 million, the Associated Press reported.

Both Bannon and Kolfage, a onetime UA student and veteran who was severely wounded in Iraq, were indicted on charges of conspiracy to commit wire fraud and conspiracy to commit money laundering.

Also charged were Andrew Badolato and Timothy Shea, the owner of an energy drink company called Winning Energy. The company’s cans feature a cartoon superhero image of Trump and claim to contain β€œ12 oz. of liberal tears.”

β€œThis 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,” Philip R. Bartlett, inspector-in-charge of the New York Field Office of the U.S. Postal Inspection Service, said in a news release Thursday.

At his hearing in Manhattan federal court, Bannon had his hands cuffed in front of him while a large, white mask covered most of his face, the Associated Press reported. He rocked back and forward as he sat on a chair in a holding cell, from where he appeared via video as his lawyers were on the telephone. He was released on $5 million bail, secured by $1.75 million in assets.

At the Sahuarita event, Bannon took the stage at the Quail Creek Country Club alongside what he called the β€œMAGA original gangsters,” including immigration hardliners Kris Kobach, the former Kansas Secretary of State, and Tom Tancredo, a former Republican congressman from Colorado, to raise money for the We Build the Wall group.

Among the donors at the event was Ron Poedtke, an 83-year-old Quail Creek resident and Trump supporter who told the Star he donated $100 because β€œwe’ve got to protect our sovereignty.”

After hearing about the indictment, β€œinitially, I had a twinge of disappointment, but until such time as they have their trial and their say, I’m not going to condemn them,” Poedtke said Thursday.

He wondered if the indictment was a β€œploy to make President Trump look bad ahead of the election.” However, β€œif this holds true, then yeah, shame on me,” Poedtke said.

Other prominent members of the We Build the Wall group, who did not attend the event in Sahuarita, included Erik Prince, founder of the controversial security firm Blackwater, and former major league baseball pitcher Curt Schilling. They were not named in the indictment.

On Thursday, Trump quickly distanced himself from Bannon while claiming he knew nothing about the project and never believed in a privately financed border wall.

β€œWhen 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 told reporters at the White House, adding that he felt β€œvery badly” about the situation.

Last year, We Build the Wall constructed a half-mile of bollard-style border fence on privately donated land in New Mexico near El Paso, Texas. They used early construction to raise more cash and more private land donations in border states. They also provided a portion of the funds for several miles of wall along the Rio Grande near Mission, Texas, which already are showing signs of erosion just a few months after they were built.

The contractor for both private wall projects in Texas was Fisher Sand and Gravel, which was awarded $1.7 billion in contracts from the federal government to build border wall in Southern Arizona.

Bannon worked at Biosphere 2 near Oracle in the 1990s. He also served in the Navy, worked as an investment banker at Goldman Sachs and as a Hollywood producer. When impeachment proceedings began against Trump, Bannon started hosting a pro-Trump podcast called β€œWar Room.”

A day before the indictment was unsealed, Kolfage was a featured guest on the show.

Fake invoices and vendors

The We Build the Wall group sprang from an online effort in December 2018 led by Kolfage to raise funds to build a wall along the U.S.-Mexico border.

The campaign raised more than $20 million from about 350,000 people before it was suspended. They formed a new organization, which required them to get donors to β€œopt-in” and allow their previous donations to be used by the new organization.

Between the start of the β€œopt-in” period in January 2019 and October 2019, We Build the Wall raised about $25 million in new or opted-in funds, according to the indictment.

In text messages obtained by authorities, Badolato told Bannon that saying Kolfage would not be paid would become the β€œmost talked about media narrative ever” because it β€œremoves all self-interest taint” and β€œgives Brian Kolfage saint hood,” according to the indictment.

β€œIn fact, Kolfage went so far as to send mass emails to his donors asking them to purchase coffee from his unrelated business, telling donors that the coffee company was the only way β€˜he keeps his family fed and a roof over their head,’” according to the indictment.

Some donors wrote directly to Kolfage and said β€œthey 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,” according to the indictment.

They allegedly used a shell company to route payments from We Build the Wall by using β€œfake invoices and sham β€˜vendor’ arrangements,” according to the indictment.

They allegedly agreed to covertly pay Kolfage β€œ$100k upfront (and) then 20 (per) month,” according to messages obtained by authorities.

On Feb. 11, 2019, Bannon and Badolato used the nonprofit to pay Kolfage $100,000, according to the indictment.

Payments continued until October

Bank records showed We Build the Wall wired $250,000 to a nonprofit, which wired Kolfage $100,000 and $20,000 in each of the following two months. On tax forms, the group falsely stated the funds were payments to Kolfage’s wife for media work. Later payments in 2019 were made under the guise of β€œsocial media” work or β€œconsulting.”

The payments continued until October, when they learned from a financial institution they might be under criminal investigation, according to the indictment. At that point, they started using encrypted communications, stopped paying Kolfage, and removed any mention of the promise that Kolfage would not be paid from the We Build the Wall website. They added a statement to the website that Kolfage would be paid a salary starting in January 2020.

Bannon, Badolato and Shea β€œeach received hundreds of thousands of dollars in donor funds from We Build the Wall, which they each used to pay for a variety of personal expenses, including, among other things, travel, hotels, consumer goods, and personal credit cards,” according to the indictment.
In a text message, Kolfage told Badolato β€œas far as [the public] know[s] no one is getting paid” and β€œsalaries will never be disclosed,” according to the indictment.

Federal prosecutors asked a judge to order the defendants to forfeit any property or currency traced to the fraud, including a 2019 Jupiter Marine boat named β€œWarfighter” and a 2018 Land Rover. Prosecutors did not mention the wall projects in Texas in the forfeiture request.

Customs and Border Protection officials recently published a request for information to gauge interest among private groups in building sections of the border wall, including 40 miles of secondary wall near Tucson and 4 miles near Yuma. CBP is β€œcurrently evaluating the responses and next steps,” according to a July 28 statement from the agency.

CBP did not immediately respond to an inquiry from the Star about whether We Build the Wall would be eliminated from consideration.

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The Associated Press contributed to this report. Contact reporter Curt Prendergast at 573-4224 or cprendergast@tucson.com or on Twitter

@CurtTucsonStar.