Former Trump adviser Steve Bannon, 3 others, indicted for fraud

NEW YORK - The leaders of an online fundraising campaign to build the border wall have been indicted on federal charges for wire fraud and money laundering. Former Trump adviser Steve Bannon is among the four people who are accused of defrauding hundreds of thousands of donors.

The charges were contained in an indictment that was unsealed in Manhattan federal court on Thursday morning.

Brian Kolfage, Stephen Bannon, Andrew Badolato, and Timothy Shea were arrested for allegedly being behind an online crowdfunding campaign known as "We Build the Wall" that raised more than $25 million.

Bannon entered a not guilty plea via video in a Manhattan court on Thursday afternoon, hours after he was pulled from a yacht off the coast of Connecticut and arrested.

The magistrate judge approved Bannon's release on $5 million bail, secured by $1.75 million in assets.

According to the federal indictment, the organizers claimed that 100% of the funds raised would be used in helping fund the wall and it was "a volunteer organization" but that was not true.

Prosecutors with the Southern District of New York allege that Bannon received more than $1 million through a non-profit organization under his control. They claim that as least some of that money was used to cover hundreds of thousands of dollars of his personal expenses.

They say that Kolfage covertly took more than $350,000 in donor funds. The indictment claims the payments to Kolfage were routed through a non-profit and a shell company under Shea's control.

The organizers did so by using fake invoices and sham "vendor" arrangements, among other ways, to ensure, prosectors claim, and Kolfage noted in a text message to Badolato, that his pay arrangement remained "confidential" and kept on a "need to know" basis.

Each is charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, each of which carries a maximum penalty of 20 years in prison.

Acting U.S. Attorney Audrey Strauss said in a statement: "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. 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 and Badolato were set to appear in a Florida federal court.  Shea was expected to appear before a federal judge in Colorado.

The organization claims to have completed a mile-long 18-foot-tall steel-bollard border barrier in Sunland Park, New Mexico in June 2019.  A second 3.5-mile section was completed in Mission, Texas in January 2020, according to the group's website.

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

“When 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 “very badly" about the situation.

Below is a 2017 FOX 5 NEWS profile on Steve Bannon:

The Associated Press contributed to this report.