Shell entities and anonymous associates are at the core of a complaint unsealed Thursday by Audrey Strauss, the acting U.S. District Attorney for the Southern District of New York, against We Build the Wall, a tax-exempt 501(c)(4) nonprofit created in January 2019 to build a wall on the southern border of the U.S. using private funds.
Officers of the organization are accused of using an unrelated nonprofit, identified as Non-Profit-1, as a pass-through entity to pay the organization’s founder and president, Brian Kolfage, an initial salary of $100,000 in violation of the group’s bylaws, which prohibit any donated funds going to officers. The group’s marketing materials also included language that 100% of donations would go to wall construction and officers would receive no compensation.
“On or around February 11, 2019,” the complaint says, “the defendants caused Non-Profit-1 to pay Brian Kolfage, the defendant, $100,000 in funds from We Build the Wall.”
Non-Profit-1 is an entity controlled by We Build the Wall’s chairman, Stephen Bannon, a former media executive and White House adviser, according to the complaint.
In a social media post, Kolfage said the complaint is politically motivated. “The [Southern District of New York] is on a[n] all out assault,” he said. “I've obtained one the best super lawyers around who isn't afraid to fight back at the politically motivated assaults against me.” The organization couldn’t be reached for comment.
Pass-through entities
We Build the Wall has raised about $25 million from donors. Prior to making its first payment to Kolfage, We Build the Wall wired $250,000 to Non-Profit-1. “No more than a week later,” the complaint alleges, “that same bank account was used to make a $100,000 wire transfer to Kolfage.”
After that initial payment, Non-Profit-1 made monthly payments of $20,000 to Kolfage, according to the complaint, which alleges the payments were structured in a way to hide their intended use. “To conceal the payments Kolfage received from Non-Profit-1,” the complaint says, “Non-Profit-1 subsequently issued a Form 1099 falsely stating that it had paid Kolfage’s spouse for ‘media.’”
Starting in April 2019, the $20,000 monthly payments were passed through third-party entities that were supposed to be vendors of We Build the Wall, the complaint alleges.
One of the third-party entities was a “veiled” limited liability shell corporation controlled by Timothy Shea, who had been involved in an early effort with Kolfage to solicit wall construction donations on GoFundMe. The complaint describes that effort as a precursor to the We Build the Wall organization.
Shea’s anonymous corporation, called Shell Company-1, began receiving payments in April 2019 from We Build the Wall. A portion of the payments was transferred to Kolfage.
The complaint includes two examples. On April 22, 2019, the shell company received a $50,000 wire from We Build the Wall and, four days later, paid half of that amount to Kolfage. And on May 21, the shell company received a $30,000 wire from We Build the Wall, and on June 5, paid $20,000 to Kolfage.
The payments were said to be for social media work the shell company provided. “In fact, neither Kolfage nor anyone else had done such work for Shell Company-1,” the complaint said.
Shea was also said to have kept a portion of the payments for himself.
Anonymous associates
Another defendant who had control over We Build the Wall funds, Andrew Badolato, is alleged to have used bank accounts under his control to pass We Build the Wall funds to Kolfage as additional salary payments.
Some of the payments were passed through to an anonymous person, called Associate-1, purportedly for work done on the wall. In one instance, Badolato paid the associate $50,000. The associate passed $20,000 to Kolfage and kept $30,000 for himself, the complaint alleges.
Badolato used a second anonymous associate, identified as Associate-2, to pass additional money to Kolfage, the complaint alleges. In August 2019, Badolato paid the second associate $150,000, of which $70,000 went to Kolfage, $50,000 to Badolato, and $20,000 to an attorney working on a matter on behalf of Badolato that was unrelated to We Build the Wall. The remaining $10,000 wasn't discussed in the complaint.
In total, Kolfage is said to have received more than $350,000.
Charges disputed
The complaint says Kolfage used the funds for home renovations, payments toward a boat, a luxury SUV, a golf cart, jewelry, cosmetic surgery, personal tax payments and credit-card debt.
Bannon was also listed as a defendant. He is said to have taken more than $1 million from We Build the Wall donations passed through to his entity, Non-Profit-1. Some of that money went to Kolfage; some stayed with Bannon.
“Bannon used a substantial portion of those donor funds for personal uses and expenses,” the complaint alleges.
Bannon has pleaded not guilty and described the indictment as a political hit job. "I'm not going to back up one inch," Bannon said on America’s Voice News, according to Fox News. "All these charges are nonsense.”
