How Bannon and His Indicted Business Partners Cashed In on Trump
They all had colorful histories, though not necessarily the kind to inspire instant confidence. And they had a shared devotion to President Trump.
Brian Kolfage, a decorated Iraq War veteran and motivational speaker, had created a string of pro-Trump websites using bogus stories to draw clicks and sell ads. Timothy Shea sold a Trump-themed energy drink he marketed as containing “liberal tears.” Andrew Badolato had a trail of failed businesses, unpaid tax bills and sexual misconduct allegations.
They came together early last year with a cherished project — building Mr. Trump’s long-promised, long-stalled border wall — and influential supporters to promote it, including Stephen K. Bannon, an architect of Mr. Trump’s 2016 victory and a former White House strategist. Together, the four men pitched We Build the Wall as a way for Americans worried about border security to do an end run around Congress and construct at least 100 miles of barriers with private money.
But according to a federal indictment unsealed on Thursday, the men swindled donors, treating the more than $25 million they raised as a private piggy bank. Mr. Bannon, through an unnamed nonprofit organization, received more than $1 million from the group, according to the court documents. Mr. Kolfage got a total of $350,000 that he spent on “home renovations, payments toward a boat, a luxury S.U.V., a golf cart, jewelry, cosmetic surgery, personal tax payments and credit card debt,” the indictment claimed. The others collected hundreds of thousands of dollars for personal expenses, prosecutors said. Mr. Bannon pleaded not guilty in the case.
Mr. Kolfage, the public face of the effort, had repeatedly assured donors that 100 percent of the money would go toward construction. “It’s hypocritical and ironic,” said Javier Perea, the mayor of Sunland Park, N.M., where work on the private wall began. “These were individuals that were selling the idea of enforcing U.S. laws and enforcing our rules but were the ones who misled the American public on their intentions, if the allegations are true.”
Today, just less than five miles of the private wall have been built, according to the company’s website. After experts recently said that the group’s decision to build along the banks of the Rio Grande in South Texas could cause the barriers to fall into the river, even Mr. Trump criticized the project.
But the effort earlier drew praise from Homeland Security and Border Patrol officials, as well as the president’s son Donald Jr. A cast of Trump supporters worked on the board of We Build the Wall, including Kris Kobach, the former secretary of state for Kansas; Erik Prince, the defense contractor; Tom Tancredo, a former Colorado congressman; as well as the frequent Trump defenders David A. Clarke Jr., a former Wisconsin sheriff, and the former Red Sox pitcher Curt Schilling.
The project was going forward as recently as Wednesday, when Mr. Kolfage appeared on Mr. Bannon’s podcast, “War Room,” to tout a fund-raising effort for another cause — however vague — close to the president’s rhetoric: a fund “for the victims of Black Lives Matter.”
The We Build the Wall operators had tied themselves and their fortunes to the Trump era and the president’s brand, scorning Democrats and the federal bureaucracy. Mr. Kolfage, 38, who had lost both legs and one arm in Iraq while serving in the Air Force, has posted multiple videos on Twitter mocking former President Barack Obama’s border control efforts and praising Mr. Trump’s.
Mr. Bannon, 66, and Mr. Badolato, 56, a financier from Sarasota, Fla., had been business partners since at least 2003, when they joined to create a number of new ventures, including a nasal spray company called SinoFresh Healthcare.
But like many business start-ups that Mr. Badolato was involved in, this one became mired in controversy, as a dispute broke out among executives over accusations of illegal trading of company stock and of using corporate funds for personal gain.
Mr. Shea, 49, of Castle Rock, Colo., and his wife, Amanda, had built a growing national profile for themselves using social media to promote their business ventures. One of those was a company called Winning Energy, which frequently used images of Mr. Trump to drive sales on products such as a can of what it described as 12 ounces of “liberal tears.” The brand sponsored a Trump boat parade in Florida this July.
Mr. Kolfage, who is from Miramar Beach, Fla., and attended a fund-raising event at Mar-a-Lago last year with the president’s son Eric, spent years operating Facebook pages and websites that sometimes trafficked in false or exaggerated news stories, many of them pro-Trump.
In an interview with The New York Times in April 2018, he spoke about those efforts, part of a long-established online industry in which Facebook pages direct users to the websites that make money by selling ads.
He admitted spreading fake stories — “going at it like in the Wild West” — but blamed his lack of journalism training. “You’d try to be as factual as possible while injecting opinion,” he said. “There were a lot of people using sources that were just wrong. That’s how it started going south.”
Mr. Kolfage became business partners with Ms. Shea after she built her own social-media-based marketing company that Mr. Kolfage used to increase traffic and profit at one of his websites, Right Wing News. When Facebook shut down that group in 2018 — shortly before the congressional elections — Mr. Kolfage and the Sheas started a new fund-raising group they called Fight4FreeSpeech, which attracted support from nationally known conservatives including Donald Trump Jr., and often featured video clips of Mr. Bannon.
Mr. Kolfage suggested that the Trump campaign and presidency were a critical factor in his business success. “Connecting on Facebook made people fell like they were part of something,” he said. “Having a president who’s not part of the same old political spectrum really united people.”
His social media endeavors led to the birth in December 2018 of We Build the Wall, even as Mr. Trump struggled to secure money from Congress.
Mr. Kolfage repeatedly promised that none of the money would be used to pay executives involved in the fund-raising efforts. But after it became clear that there was no mechanism to transfer the money to the government, Mr. Kolfage said the group would become a private foundation and build its own wall. It had determined that only $800,000 of the approximately $20 million raised at that point had to be returned to donors.
“No rules were broken,” Mr. Kolfage said in an interview last year. “Ninety-four percent of the donors we have been able to reach are opting in.”
The private wall did get started, but backlash came almost as soon as workers began digging into Sunland Park. Mr. Perea said the group failed to obtain the necessary permits, forcing him to order a temporary halt on the work.
Mr. Kolfage responded by tweeting that Mr. Perea supported “open borders, the sex slaves and illegal drugs coming into their communities,” prompting thousands of complaints to Mr. Perea’s inbox.
“They were deliberately withholding information,” said Mr. Perea, who said county appraisers had valued the privately built barriers at nearly $4 million.
The group also built along the riverbank in South Texas, where the construction of the Trump administration’s border wall had been held up by lawsuits filed by landowners protesting how it would cut through their property.
Mr. Bannon began to play an increasing role in the organization, the indictment said, “including its finances, messaging, donor outreach and general operations.” For example, he held promotional events near El Paso, Texas, to highlight progress on construction and continue raising funds.
The group hired a North Dakota company, Fisher Sand & Gravel, to build the barriers and publicly celebrated its work. The Trump administration then granted the North Dakota company a $400 million contract for the government-built wall, a deal that is currently being investigated by the inspector general for the Defense Department.
While Mr. Trump distanced himself from the project on Thursday, Mr. Kobach, the former Kansas secretary of state, told The Times last year that the group had received the president’s blessing.
Robert S. Spalding III, a retired brigadier general who served on Mr. Trump’s National Security Council, said he had agreed to join the board of directors at the request of Mr. Bannon, whom he knew from the White House, and had attended a symposium the organization held at the site of one of its border wall segments.
“All I can say is, it’s sad. I did it, to be honest, because I respected Brian because he had fought for the country and as a fellow airman I wanted to support him,” General Spalding said of Mr. Kolfage. “They just reached out to me and asked if I would do it.” He added that he had not been involved in the group’s financial operations and had resigned.
Donors, however, wondered what had happened to the money.
The Florida Department of Agriculture and Consumer Services, which oversees nonprofit groups in the state, announced last year that it had opened an investigation of We Build the Wall after complaints from three consumers.
One of the complaints, from Minnesota Assistant Attorney General Wendy Tien, who said she was writing in her personal capacity, raised concerns that We Build the Wall had misled donors in its efforts to raise funds. She questioned whether the group had obtained nonprofit status.
Another complaint came from Harvey Garlotte, a Hattiesburg, Miss., man who had donated $60. Mr. Garlotte said he “felt duped” because Mr. Kolfage — who had originally said he would donate the money to the border wall — was redirecting it to a nonprofit organization he controlled.
“From my side of the road, Mr. Kolfage was simply using a hot-button topic, a very emotional topic, and his status as a wounded veteran, for selfish and self-serving reasons and personal financial gain,” Mr. Garlotte wrote to The Times.
Mr. Kolfage at the time mocked such concerns. “This is hilarious,” he wrote, retweeting official copies of the complaints.
In a statement on Thursday, the Florida Department of Agriculture and Consumer Services said that after opening an investigation in May 2019, it had referred the case to the F.B.I. It was not clear whether the referral had led to the arrests on Thursday.
After federal and state investigators began to examine the nonprofit group — which was created so recently it has not filed even its tax return detailing how it spent its money — they began to uncover evidence that large sums were being transferred to a separate nonprofit set up by Mr. Shea.
“They did so by using fake invoices and sham vendor arrangements, among other ways,” the indictment says.
Mr. Kolfage, in a text message recovered by investigators, reminded Mr. Badolato that his pay, which ultimately totaled more than $350,000, needed to remain confidential and on a “need to know basis,” the indictment says.
When they learned in October that they had been targeted by investigators, Mr. Kolfage and Mr. Badolato began to use encrypted messaging applications on their phones, and the We Build the Wall website was revised to remove any reference to Mr. Kolfage’s not being compensated, the indictment says. As of January, it said he would be paid a salary.
Kitty Bennett contributed research.