Fed Prosecutors Target Steve Bannon's Murky Non-Profit: Was his White
Nationalism just a way to Get Rich off the Rubes?
PROPUBLICA
08/25/2020
19SHARES
Tucked at the bottom of the long indictment against Bannon, prosecutors say
they want to seize the assets of his nonprofit Citizens of the American
Republic, shedding more light on the secretive political group's finances.
by Yeganeh Torbati | -
( ProPublica ) - Near the end of a lengthy indictment detailing fraud
allegations against Stephen Bannon, former Donald Trump campaign CEO and
chief strategist and his associates, federal prosecutors reveal that they
intend to seize the assets of a murky nonprofit organization Bannon launched
in 2017 to promote "economic nationalism."
The group is Citizens of the American Republic, a California-based nonprofit
that serves as a platform for Bannon's films and podcasts that promote
Trump's ideology. Throughout the 24-page indictment, the group appears to be
referenced as "Non-Profit-1" in a scheme in which Bannon and his partners
were allegedly looting a crowdsourced charity, We Build the Wall, for
personal gain. The indictment never outright states that "Non-Profit-1" is
Citizens of the American Republic, but it describes it as an "organization
founded by [Bannon] with the stated purpose of promoting economic
nationalism and American sovereignty," which closely matches the nonprofit's
own stated aims.
The indictment alleges that "Non-Profit-1" received over $1 million through
the scheme and funneled part of it to Brian Kolfage, the military veteran
who raised money to build a privately funded wall to help Trump block off
the southern border.
The document also sheds light on an oblique financial trail linking a
loose-knit group of private businesses and nonprofit organizations
politically aligned with Trump. In addition to Bannon's nonprofit and We
Build the Wall, federal investigators are moving to seize assets from four
other entities, including two affiliated with Kolfage - a defunct right-wing
news site called Freedom Daily that operated out of Florida and America
First Medical, a medical supplies company Kolfage formed in Wyoming to sell
masks in the midst of the coronavirus pandemic.
U.S. rules allowing so-called dark money groups like Bannon's to hide the
identity of their donors helps them maintain a shroud of secrecy, which is
only partially pierced by a criminal indictment and the subpoena power of
investigators.
"The only reason any of this is coming to light is it turns out that the
money that was being collected wasn't necessarily used for the promised
purposes and instead it was used to enrich someone," said Daniel Weiner,
deputy director of the Brennan Center for Justice's Election Reform Program.
"The secrecy, at least for the people who helped design the system, is a
feature not a bug."
Kolfage told Reuters in 2019 that he had earned seven figures through
creating and selling conservative websites like Freedom Daily.
Bannon played a critical role in helping Kolfage set up We Build the Wall
Inc. after GoFundMe, the crowdfunding platform he had been using,
accumulated millions in donations from supporters, the indictment charges.
GoFundMe demanded that Kolfage set up a legitimate nonprofit to accept
donations. The effort ultimately raised over $25 million after promising -
falsely, the indictment alleges - that the donations would not benefit
Kolfage.
That "removes all self-interest taint" and gives "Brian Kolfage saint hood,"
stated Andrew Badolato, a longtime Bannon associate who was also indicted,
in a text to Bannon that prosecutors quoted. Badolato and his lawyer did not
respond to emails requesting comment.
Bannon promoted the wall effort on his podcast "War Room: Pandemic" as
recently as Wednesday, when he had Kolfage on to discuss the situation at
the border.
"You've been the leader of this, assisting President Trump in building this
wall in these tough areas," Bannon said to Kolfage.
Bannon was arrested on Thursday by federal agents in Connecticut while on
board a superyacht owned by wealthy Chinese businessman Guo Wengui. Guo also
allowed Bannon to use his private jet to fly around promoting Republican
congressional candidates in 2018, an arrangement that experts said could run
afoul of campaign finance laws banning foreign donations.
Bannon and his lawyers did not return emails from ProPublica requesting
comment. He told reporters after posting bond that the indictment was a
"fiasco" to "stop people who want to build the wall." On Friday, Kolfage
wrote on his Facebook page that the indictment is a "witch hunt" and the
work of a "weaponized judicial system" trying to take down Trump insiders.
Kolfage did not return an email from ProPublica for comment after the
indictment. On Thursday, Trump continued to distance himself from We Build
the Wall, telling reporters that he thought "it was done for showboating
reasons" and that he didn't know that Bannon was linked to the group. A
spokesperson for Trump told Fox News that the president did not know the
other people involved with the project.
Citizens of the American Republic raised around $4.5 million in 2018,
according to its tax filings, most of which came through six- and
seven-figure donations from just a handful of donors, whose names are not
disclosed. A single donor gave $2 million. The group's purpose is to
"educate the American people" about issues including "economic nationalism,"
"social policy and respect for traditional American values" and "America
First foreign policy," among other issues, according to the filing.
The group's first filings, for the 2017 tax year, show no donations to the
nonprofit. The 2018 tax filings show transactions that occurred prior to the
timeline covered in the federal indictment.
As a "social welfare" nonprofit organized under section 501(c)(4) of the
Internal Revenue Code, the organization is not required to disclose its
donors. The contact number listed on the group's tax forms belongs to its
accountant, Robert Watkins, who did not return a message requesting comment.
The organization made just $15,000 in grants in 2018. The filings show
$250,000 in loans and payments to Bannon's film company and $40,000 in
payments to Bannon's nephew, Sean.
Bannon is the group's president and is described as working 80 hours a week
for the group with no salary. His sister Mary E. Meredith, who is vice
president, earned $20,000 for her 40 hours per week of work. Meredith did
not respond to messages requesting comment. Other top officials are Dan
Fleuette, a longtime Bannon associate, and lawyer Cleta Mitchell. Fleuette
did not respond to a LinkedIn message requesting an interview.
Mitchell has served on the boards of several right-leaning nonprofits,
including the National Rifle Association and the Committee to Unleash
Prosperity, led by Trump economic adviser Stephen Moore. She declined an
interview request.
The filings show more than $1.1 million flowing out of the nonprofit to
various large vendors, although the nature of their work is unclear. Nearly
$850,000 went toward travel, and more than $1.4 million to "conferences,
conventions and meetings." The filing says that Citizens of the American
Republic funded two Bannon documentaries, about the 2016 campaign and
Chinese President Xi Jinping, and paid for promoting them.
In 2018, Citizens of the American Republic paid nearly $144,000 to a company
called Platinum Advertising Corporation for "websites/social media." The
address given for Platinum Advertising in the filing, 30 N. Gould St., Suite
R, in Sheridan, Wyoming, is the same address as the medical supplies company
Kolfage formed, America First Medical.
Wyoming has particularly lax business transparency laws, and Platinum
Advertising appears to be a shell corporation. Its secretary is listed in
state filings as Gerald Pitts, the founder and president of Wyoming
Corporate Services, which specializes in incorporating businesses to shield
assets from taxation or disclosure. A 2011 investigation by Reuters found
that Pitts was listed as "a director, president or principal for at least 41
companies" registered at a single address in Wyoming.
Pitts did not respond to an email requesting comment.
A second company paid by Citizens of the American Republic, Fortress FM,
received more than $191,000 in 2018 for "security, logistics, and training."
The company address listed on the 2018 filing is a post office box in
Cheyenne, Wyoming, that is also used by a firm of accountants,
Kercher-Jarrett LLC.
T. Gary Kercher and Wayne Jarrett, who are listed on Kercher-Jarrett LLC's
business filings, did not respond to messages requesting comment.
One of the charges Bannon is facing is that of conspiring to commit money
laundering. The 2018 National Money Laundering Risk Assessment, prepared by
the departments of Treasury, Justice and Homeland Security and U.S.
regulatory agencies, noted the risks presented by a lax approach to shell
corporations.
"The ease with which companies can be incorporated under state law, and how
little information is generally required about the company's owners or
activities, raises concerns about a lack of transparency," the report said.
Kolfage worked with Fisher Industries, a North Dakota-based construction
firm, to help build the two border fences. We Build the Wall funded the
construction of one stretch of border fence in New Mexico, near El Paso,
Texas, and contributed 5% of funds for Fisher to build a $42 million fence
along the banks of the Rio Grande south of Mission, Texas.
A ProPublica-Texas Tribune investigation found that the Rio Grande Valley
project suffered from major erosion just months after it was finished.
Engineers warned that could result in segments of the fence toppling into
the river if not fixed. Fisher Industries' CEO has dismissed the concerns
and said that he will fix any problems.
Despite criticism of the wall-building project from the president, his
administration has awarded Tommy Fisher, CEO of Fisher Industries, about $2
billion worth of federal contracts to build segments of the border wall for
the government - at least two of them while a federal audit over concerns of
"inappropriate influence" by the president is pending.
Fisher's attorney told ProPublica and the Tribune that his client has not
received any other money beyond the construction funding provided and has no
other business with We Build the Wall.
Via ProPublica
--
