Dark Money Group in Alleged Bannon Scam Dinged by IRS

  • In Politics
  • 2022-09-07 00:01:55Z
  • By The Daily Beast
Photo Illustration by Erin O
Photo Illustration by Erin O'Flynn/The Daily Beast/Getty  

The Internal Revenue Service has stripped tax-exempt status from the dark money outfit at the center of an alleged scheme by Steve Bannon to funnel hundreds of thousands of dollars from a charity into his and his allies' pockets.

Filings posted in August show the IRS essentially rendered defunct Citizens of the American Republic, the MAGA-boosting group Bannon founded shortly after his unceremonious ouster as ex-President Donald Trump's chief strategist in 2017. The move effectively cuts off the organization's capacity to raise and spend unlimited funds from anonymous donors for political ends.

The organization was reportedly troubled from the outset, and was a key part of the embezzlement case that saw federal officers arrest the right-wing svengali off the deck of a billionaire's yacht in August 2020-only for Trump to pardon Bannon shortly before exiting the White House in 2021.

What triggered the automatic IRS revocation was the group's failure to file tax returns for three years in a row, which Bannon's camp blamed on the feds' intervention.

"The group has been dormant since August 2020 after federal prosecutors' unwarranted seizure," a Bannon spokesperson wrote in a statement to The Daily Beast. "They requested, and our lawyers agreed, that all activity ceased since 21 August 2020, over two years ago."

In pressing the case, prosecutors highlighted how Citizens of the American Republic received $380,000 from another Bannon project, We Build the Wall, which had crowdfunded cash for the purported purpose of constructing Trump's promised border barrier. The government's lawyers noted that in text message exchanges, Bannon indicated Citizens of the American Republic would compensate his partner Brian Kolfage for his service to We Build the Wall, which the pair had publicly boasted was unpaid.

Bannon and Kolfage subsequently both received funds from Citizens of the American Republic, which according to the Justice Department helped Kolfage keep up a "lavish lifestyle" that included ownership of a 40-foot yacht. However, Bannon's aide insisted to The Daily Beast that none of the money he got came from We Build the Wall.

Kolfage, after pleading guilty along with a fellow co-conspirator to a single count of conspiracy to commit wire fraud, now might be facing a sentence of five years or even longer. The case of a third accused participant in the scheme concluded in a mistrial in June.

Legal representatives for Kolfage didn't return The Daily Beast's request for comment.

The continued negative spotlight for 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 "apoplectic" over Bannon's role in the scam.

"They don't really talk," one senior Trump adviser added.

Read more at The Daily Beast.

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