KANSAS CITY, Mo. _ Leaders of We Build the Wall, an organization that raised $25 million through a crowdfunding campaign to build a private southern border wall and whose general counsel is former Kansas Secretary of State Kris Kobach, have been indicted on fraud charges.
The indictment, unsealed in federal court in New York, alleges that the leaders of We Build the Wall, who include Stephen Bannon, former adviser to President Donald Trump, defrauded donors by telling them that the money raised was solely for a border wall. They also falsely claimed that they were volunteers who would not take compensation. We Build the Wall, launched in 2018, is a 501(c) 4 nonprofit.
Indicted Thursday were Bannon, We Build the Wall founder Brian Kolfage, Andrew Badolato and Timothy Shea. They face charges of conspiracy to commit wire fraud and conspiracy to commit money laundering.
The indictment states that Bannon, Kolfage, Badolato and others became aware through a financial institution in October 2019 that the organization was under federal criminal investigation and took steps to conceal the fraudulent scheme.
Kobach has not been charged and is not referenced in the indictment. Kobach, who campaigned unsuccessfully for governor in 2018 and U.S. Senate in 2020, has served as the group's general counsel since early 2019. He has also featured prominently in the group's fundraising videos.
He repeatedly touted his involvement with the group during his Senate race, saying as recently as July 6 that he was working with We Build the Wall.
"There's a lot of legal work in that because not only am I negotiating with landowners where we're going to build the next privately funded section of wall, I'm also talking to the Department of Homeland Security and making sure our specifications are consistent with theirs," Kobach said.
We Build the Wall is one of seven clients that paid Kobach's law firm $5,000 or more since January of 2019, according to the financial disclosure form he filed with the U.S. Senate in May. He was not required to list the exact amount he received from each client, but the total income from his firm was listed as $444,000 from January of 2019 to May of 2020.
The disclosure form states that Kobach served as both a director and general counsel for We Build the Wall.
Kobach did not answer a phone call Thursday morning. The charges against the organization come just weeks after Kobach lost the Republican primary to Rep. Roger Marshall by double digits.
President Donald Trump in July lamented We Build the Wall's efforts after a report surfaced in Texas that the private wall was poorly built.
Trump has based his political brand on the promise to build a southern border wall in hopes of deterring undocumented immigrants from crossing the United States-Mexico border. He complained in a tweet that We Build the Wall "was only done to make me look bad."
However, the president's oldest son, Donald Trump Jr., participated in a fundraiser for the group with Bannon and Kobach last year. Trump, Jr., was instrumental in introducing Kobach to his father in 2016 and joined Kobach for fundraisers during his 2018 campaign.
The Trump organization sought Thursday to distance the president's son from We Build the Wall.
"Don gave one speech at a single We Build the Wall event over a year ago with a group of angel moms (mothers with children murdered by undocumented immigrants) and besides that, has no involvement with their organization. He never gave them permission to use him as a testimonial on their website and was unaware they included him as one until today's media reports about it," said Amanda Miller, a spokeswoman for Trump Jr.
"His previous praise of the group was based on what he was led to believe about their supposed intention to help build the wall on our southern border and if he and others were deceived, the group deserves to be held accountable for their actions."
The indictment said that We Build the Wall leaders laundered money through a shell company and fake invoices to pay themselves.
"As alleged, 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," said Audrey Strauss, acting U.S. attorney for the Southern District of New York.
"While repeatedly assuring donors that Brian Kolfage, the founder and public face of We Build the Wall, would not be paid a cent, the defendants secretly schemed to pass hundreds of thousands of dollars to Kolfage, which he used to fund his lavish lifestyle."
Kolfage did not immediately respond to an email Thursday. In an interview in June with The Kansas City Star for a story about Kobach's Senate campaign, Kolfage said he and Kobach were first connected through Bannon. At the time, Kolfage said Kobach was "involved in every decision-making process for the organization."
"Because we've had so many eyes just watching every move that we make and he's been able to help me make sure everything we do is by the book and legally above board," Kolfage said.
Kolfage, 38, is alleged to have covertly taken $350,000 in We Build the Wall funds for his personal use. Bannon, 66, is alleged to have routed $1 million from the organization, funneling it through an unnamed nonprofit that he controls to pay himself and Kolfage.
When We Build the Wall first launched, it pledged to donate money it raised to the federal government to construct a southern border wall. At the time, a government shutdown loomed as Trump insisted that any federal appropriations bill include funding for a wall.
Questions emerged about the initial fundraising _ and where the money would go _ after the group collected $17 million within its first week through a GoFundMe page. Kolfage, Bannon and Badolato created an advocacy nonprofit that could receive the money raised by We Build the Wall and switched its strategy from passing the money on to the government to building a private wall.
To assuage concerns from GoFundMe and donors, Kolfage promised he and other We Build the Wall insiders would draw no salary or compensation from the donations, 100% of which would go to construction.
Despite those promises, the indictment alleges, the defendants reached a secret agreement to pay Kolfage $100,000 up front and $20,000 per month afterward. The payments were passed through nonprofits controlled by Bannon and others.
The grand jury indictment suggests prosecutors possess text messages confirming the payment arrangements, including one from Bannon directing Badolato to wire cash to an unnamed nonprofit.
"(A)s far as (the public) know(s) no one is getting paid," Kolfage wrote to Badolato, according to the indictment. "(S)alaries will never be disclosed."
The defendants disguised the payments through a bogus IRS form that said the money was to Kolfage's wife for "media," according to the indictment.
Subsequent payments were allegedly routed through other vendors and nonprofits.
After the defendants learned that they might be under federal criminal investigation, We Build the Wall's webpage dropped any mention that Kolfage would not receive payment and was replaced with a statement that said he would start taking salary in January 2020.
In a Star story from a year ago, Kobach said his work with We Build the Wall was "one of the most rewarding things I have done in my career" and helped deepen his understanding of threats posed by drug cartels.
The story uncovered concerns by a federal agency about We Build the Wall's work, chiefly that it would direct people seeking to cross the border near the private wall to a federal dam on the Rio Grande River, raising security and safety concerns.
Officials in Sunland Park, New Mexico, where some of the construction was taking place, were unhappy about the project and issued a stop-work order because work was proceeding without necessary permits.
Subscribers to We Build the Wall's email list received a message encouraging them to donate to Kobach's campaign for Senate, which prompted complaints from multiple watchdog groups who alleged that the nonprofit had violated federal campaign finance laws.
