The Internal Revenue Service has stripped the tax-exempt status of the dark money at the center of an alleged scheme by Steve Bannon to siphon hundreds of thousands of dollars from a charity into his and his allies’ pockets.
Records released in August show that the IRS effectively defunct Citizens of the American Republic, the MAGA advocacy group Bannon founded shortly after he was unceremoniously ousted by former President Donald Trump’s chief strategist in 2017. The move effectively cuts organization’s ability to raise and spend unlimited funds from anonymous donors for political purposes.
The organization was reportedly troubled from the start and was a key part of the embezzlement case that led federal officers to arrest the right-wing Bengali from the deck of a billionaire’s yacht in August 2020—only for Trump to pardon Bannon shortly before he left from the White House in 2021.
What triggered the automatic IRS recall was the group’s failure to file tax returns for three consecutive years, which Bannon’s camp blamed on federal interference.
“The group has been inactive since August 2020 following an unwarranted seizure by federal prosecutors,” a Bannon representative wrote in a statement to The Daily Beast. “They requested, and our lawyers agreed, that all activity cease as of August 21, 2020, over two years ago.”
In prosecuting the case, prosecutors highlighted how Citizens for America received $380,000 from another Bannon project, We Build the Wall, which it had co-funded with cash for the purported purpose of building his promised border wall. Trump. Government lawyers noted that in the text message exchanges, Bannon indicated that Citizens for America would compensate his partner Brian Kolfatz for his service to We Build the Wall, which the couple had publicly boasted was unpaid.
Bannon and Kolfage then received funds from the citizens of the American Republic, which the Justice Department said helped Kolfage maintain a “luxurious lifestyle” that included ownership of a 40-foot yacht. However, Bannon’s aide insisted to The Daily Beast that none of the money he took came from We Build the Wall.
Kolfage, after pleading guilty along with a co-conspirator to a single count of conspiracy to commit wire fraud, could now face up to five years in prison or more. The case of a third defendant involved in the scheme ended in a mistrial in June.
Legal representatives for Kolfage did not respond to The Daily Beast’s request for comment.
The continued negative spotlight on Bannon couldn’t come at a worse time.
Now firmly on the outside of Trump’s inner orbit, he now has little contact with his former boss, whom he still praises on a daily basis. A source close to Trump described the former president as “disarming” about Bannon’s role in the fraud.
“They’re not really talking,” added a senior Trump adviser.
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