Inside Steve Bannon’s mysterious charity at center of wall project fraud

Wealth


Former White House Chief Strategist Steve Bannon exits the Manhattan Federal Court, following his arraignment hearing for conspiracy to commit wire fraud and conspiracy to commit money laundering, in the Manhattan borough of New York City, New York, U.S. August 20, 2020.

Andrew Kelly | Reuters

A little-known not-for-profit run by Steve Bannon, and now linked to the $1 million in fraud charges against him, made loans and payments to Bannon, his son and other family members but made few grants, according to IRS filings.

According to federal prosecutors, Bannon received $1 million in funds from We Build the Wall, a crowdsourced project that raised more than $25 million to help build a border the wall.

To divert funds from the wall project, Bannon created a separate not-for-profit that the indictment refers to only as “Non-Profit-1.” The indictment said the non-profit was a 501(c)(4) “founded by Bannon with the stated purpose of promoting economic nationalism and American sovereignty.” 

The description matches an LA-based charity that Bannon founded in 2017 called Citizens of the American Republic, created to “advance the ideals of American nationalism and American sovereignty.”

The group is also named by the Justice Department as one of the entities required to forfeit funds as part of the wall fraud investigation. 

According the latest IRS filing by Citizens of the American Republic, the group took in $4.45 million in contributions in 2018. Because 501 (c) (4)’s are considered “social welfare” groups, they do not have to disclose their donors so it’s unclear where the $4.45 million in contributions came from.

Yet almost all the donations went to expenses, rather than public grants.  Out of the $4.45 million in revenue, $4.39 million went to expenses, according to the tax filings. Only $15,000 went to grants. Bannon is listed as the principal officer and president.

The expenses for the group included a $50,000 payment and $200,000 loan for “general expenses” to “Bannon Film Industries Inc,” which lists Steve Bannon as the sole owner. The group also paid $40,000 to Sean Bannon, Steve Bannon’s nephew, and Mary E. Meredith, Steve Bannon’s sister. The group spent over $1.1 million on “other expenses” and $1.4 million on “conferences, conventions and meetings.”

The only grant listed on the IRS form is $10,000 to the Jamison Road Volunteer Fire Co. Inc in Elma, NY, where Bannon held a political rally in 2018.

Citizens of the American Republic could not be reached for comment. The phone number listed for the group on the IRS filings went to a Florida-based accountant, who declined comment.

Bannon’s use of a 501 (c) (4), and the six-figure payments he has reportedly received  from other non-profits in the past, show how an obscure corner of the charity world can be used for tax-efficient personal payments. Because they don’t have to disclose donors, the groups have also become popular as sources of “dark money” for political candidates and campaigns.

The rules governing excessive pay on non-profits are murky. According to rules governing non-profits, tax-exempt groups are barred from providing “excess benefit” to a private individual. Yet there is no set number for exceeding the rule. With IRS audits down by nearly half  over the past decade, there is less oversight of how non-profits pay or benefit their directors.

 

 



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