Below is my column on the Steven Bannon case that ran in the Washington Times. Notably, one of the defendants indicted with Bannon is a Andrew Badolato, a person who has repeatedly assisted the government in prior cases. While Badolato has pleaded not guilty and has a long association with Bannon, his history could raise a serious threat for defense counsel that he might cut a deal with prosecutors. In a case of this kind, a cooperating witness confirming an intent to hide transactions would be devastating to the defense. A May 24, 2021 trial date has been set though U.S. District Judge Analisa Torres called that date “optimistic.” (Note: postings this week may be limited due to my duties in a criminal defense case).
Here is the column:
“This entire fiasco is to stop people who want to build the wall.” That was the only response noted from former White House strategist Steve Bannon after his indictment for fraud in New York last week.
Facing up to 20 years in prison, it was perhaps the most ambitious political spin from a man whose creativity was matched only by his audacity. If Mr. Bannon is hoping to convert his signature deep-state conspiracy into a criminal defense, however, he will face perhaps his most formidable opponent yet: himself.
In a recent book, “Deep State: Trump, the FBI and the Rule of Law” by James B. Stewart, Mr. Bannon is quoted as saying “deep state conspiracy theory is for nut cases” and that such claims are out of bounds since “America isn’t Turkey or Egypt.” He is now suggesting the a similar conspiracy is afoot to derail his work to build the wall. However, Mr. Bannon needs an explanation, not a narrative, to address his alleged conduct in the indictment.
The problem with the deep-state conspiracy as a defense is that it only works if prosecutors in the Southern District of New York are pursuing a simple and honest wall builder with bizarre or novel theories of criminality. In fact, the 24-page indictment is as simple as sin itself. It details knowingly false statements to donors coupled with the misuse of contributed funds for personal expenses of the four principle figures behind the “Build The Wall” campaign.
Mr. Bannon never does anything small and, when he decided to delve into the funds of this charity, he did it with signature gusto.
The charity raised $25 million and Mr. Bannon is accused of taking $1 million of that money as personal compensation. His co-defendants Brian Kolfage, Andrew Badolato and Timothy Shea are accused of taking their own shares despite assurances to donors that all of the money would go to building the wall along the southern border.
Mr. Kolfage is a double amputee war hero who first founded the campaign with the ambitious goal of seeking $1 billion. As part of the pitch, Mr. Kolfage assured donors that the charity administrators would “not take a penny in salary or compensation.” Yet, he allegedly took more than $350,000 and allegedly use the money on everything from a boat to cosmetic surgery.
It is certainly true that indictments always look more daunting before they are subject to challenge from the defense. For example, prosecutors love to detail expenses like Mr. Kolfage’s purchase of a boat called “Warfighter” to paint a defendant as not just fraudulent but frivolously fraudulent. Such purchases could have been made with money unconnected to the alleged fraud, but prosecutors love to parade shining objects as some form of loot.
Moreover, the prosecutors highlight the use of nonprofits to distribute money for the campaign. However, the fund-raising site GoFundMe had told Mr. Kolfage that it had concerns about a campaign that only promised to give the money to the government. It pushed Mr. Kolfage to use a nonprofit and Mr. Kolfage appeared to turn to Mr. Bannon for help.
However, the indictment describes a series of shell companies and nonprofits used to distribute payments. That array of companies is all the more troubling when they served to hide that fact that officers were indeed taking considerable amounts of money from the charity. The indictment describes how money was sent to a nonprofit controlled by Mr. Bannon who then used that nonprofit to give money to Mr. Kolfage through “fake invoices and sham ‘vendor’ arrangements.”
What is striking about this indictment is the boldness and clarity of the claims made to donors including that “100% of your donations would be given to the government for the construction of a wall” and that, if the campaign did not attain its goal, the campaign would “refund every penny.” Few lawyers would sign off on such absolute promises even with the most righteous of charities.
When GoFundMe compelled the organizers to go back to donors to get them to agree to send the money to the nonprofit, these pledges were repeated to the crowdfunding site and to donors. This included assurances that “Kolfage will take no salary” and “will personally not take a penny of compensation from these donations.”
These assurances were not just limited to Mr. Kolfage. On social media, Mr. Kolfage declared almost indignantly “I thought it was pretty clear. I made a promise that I would NEVER take a penny 100% of fundraising through … donations will only go towards the wall. 100% means 100% right? Board won’t see any of that money!”
As a criminal defense attorney, I can say that “clarity” amounts to “100%” of a trial nightmare.
This does not make for a deep-state conspiracy or even a selective prosecution defense. The prosecutors can argue that these officials were actually siphoning off funds that were taken to build the wall. The irony is that the rules governing nonprofits are not particularly stringent.
As a 501(c)(4) nonprofit, the group was not legally required to disclose its donors or file regular campaign finance reports to the Federal Election Commission (FEC) like a political committee. Moreover, charities and nonprofits have long had controversies over compensation packages. The key is to be open about taking the money. The National Action Network of Al Sharpton paid him more than $1 million in compensation in 2018 and then forked over $500,000 for rights to his life story. However, it was all in the open and astonishingly no one seemed to care.
Mr. Bannon could point fingers at Mr. Kolfage, but he was still taking money donated under false pretenses. He will have to sit next to his co-defendant as prosecutors repeat mantra-like “100% mean 100%, right?”
This is why soundbites make for lousy defenses. Steve Bannon et al did a dreadful job in building the wall. What they now need to do is build a defense.
Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University and a practicing criminal defense attorney.