*Episode published 3/1/2021

Elie Honig:

From CAFE, this is Third Degree. I’m Elie Honig. Trivia question for you. Who are these three people? Brian Kolfage, Andrew Badolato and Timothy Shea? Any idea? I’ll make a little easier. Let’s turn this into a multiple choice. Option A, the members of the 1980s pop band Men At Work. Option B, the starting rotation for the 2021 Baltimore Orioles. Or option C the other guys charged with fraud in the Southern District of New York, along with Steve Bannon. Okay, I think you know which one it is. You probably remember this case. It came down about six months ago, August of 2020, a big indictment from the SDNY [Mild 00:00:53] Office.

They charge these four defendants who are the leaders of this group called We Build the Wall. Basically, the idea is that Bannon and the three other defendants raised millions of dollars from hundreds of thousands of private donors purportedly to fund construction of a southern border wall between the United States and Mexico, and they promised, We Build the Wall promised that they’d use all of the donations, all of the proceeds for wall construction, 100% they said. Guess what? Something less than 100% actually got used for the wall and something more than 0% went into the pockets of Steve Bannon and the three other defendants. Millions of dollars, actually.

A couple quick notes. First of all, let me just say as a prosecutor, fraudsters never disappoint with how they use the money they steal. It’s never for medical expenses for an ailing parent. It’s never to pay tuition money or textbook money for their kids. It’s always for ridiculous over the top items. In this case, that certainly apply. They used the money for a boat, for a luxury SUV, for a golf cart, for jewelry, and of course the best one, for cosmetic surgery. The other thing is how would this even work one wonders? I certainly wondered. Could and would the US government even accept private donations from a group? Could some private groups say, “Hey, US government. Here’s a check. We want you to use this to pay for the border wall.” I don’t think things work that way.

No matter, this was a fraud as audacious as it was cynical. The idea was let’s use this ridiculous wall premise to rip off, who? Our most fervent political supporters and it worked. They made millions off it, until they got caught and charged by the SDNY. But then you may remember a dramatic last minute pardon, and suddenly it seemed that Steve Bannon would skate away home free. But now, as of this week, maybe not because Steve Bannon it seems could be headed back to a defendant’s table in New York City sometime soon. So let’s break that down.

First of all, the pardon. One of Donald Trump’s very last acts in office happened late on his very last full day in office. It was January 19th, 2021, the day before inauguration, it was about 10 or 10:30 PM. So about 14 hours before the end of Donald Trump’s term, he issued this mass pardon for over 100 federal defendants. Many of them were rich, well-connected cronies and political allies, and the one name that jumped out was Steve Bannon. Here’s the official White House statements of the reasons why Steve Bannon was given a precious pardon. Keep in mind, pardons are supposed to be all about mercy and justice.

Here’s the reasons according to the White House. Prosecutors pursued Mr. Bannon with charges related to fraud stemming from his involvement in a political project. Mr. Bannon has been an important leader in the conservative movement and is known for his political acumen period. That’s it. That’s why, according to the White House, Donald Trump felt it was necessary to pardon Mr. Bannon, because he’s a leader in the conservative movement known for his political acumen. I mean, what an insult, what an outrage when you think about the thousands of people who have applied through the proper channels for a pardon, people who are serving unjustly long sentences for non-violent crimes.

Here’s the crazy thing. Remember, there were four defendants on this case. The mystery three I started with plus Bannon, Donald Trump only pardoned Steve Bannon, not the other three, and that tells you so much because if the idea was, this is an unjust case and unjust prosecution, you’d pardon all of them. You don’t just single out the one guy and that shows Donald Trump is playing favorites. Also, I think, there’s definitely a strain here of could Steve Bannon, if he flipped, do damage to Donald Trump? I’ll leave that out there as a question.

The reaction from most people to this pardon was largely frustration and revulsion. As you can tell, that’s certainly how I felt. Even though sympathetic to Donald Trump and Steve Bannon sort of adopted a line of, yeah, it may not be pretty, but hey, the pardon power is the pardon power and elections have consequences. Either way, whatever one’s political views were, the federal case against Steve Bannon was dead, which brings me to part two.

Enter the the Manhattan District Attorney. Now, I don’t always get everything right, but I will say I did get this right. I happened to be on air for CNN as the news of Bannon’s pardon broke. The first thing I said was, “Well, now state prosecutors need to take a look at this and they can and should prosecute Steve Bannon.” Now, of course, a pardon from the US President only covers federal crimes. Most states allow their governors or some other body to issue pardons for state crimes. But a presidential pardon only covers federal crimes. So the question became will the Manhattan DA, which is a state level prosecutor, be able to bring a charge? Well, now it looks like they’re digging in against Bannon.

We learned this week that they’ve subpoenaed some of his financial information. By the way, the feds, the SDNY Mild office, they can share their information with the Manhattan DA. It’s something called rule 6. But basically the prosecutor, the federal prosecutor just has to decide it’s necessarily and appropriate, and then you can walk your files across the street from the SDNY’s office. I could show you the way on a map. It probably takes two minutes to walk, knock on the door of the Manhattan DA’s office.

So the first question though is, is there a state level criminal charge that the Manhattan DA might bring? Here, the answer is absolutely. Now, there’s not always an obvious state law crime that matches the federal law crime. I’ll give you a couple examples. Roger Stone was convicted and then pardoned by Donald Trump for lying to the US Congress. There’s not going to be a New York State level crime that matches that. Same thing with Paul Manafort. One of the charges against Paul Manafort was a violation of the Foreign Agent Registration Act. There’s really no state law equivalent.

But with Steve Bannon, it’s just fraud. It grift, it’s theft. He absolutely can be charged under New York state law, as well as federal law. Fraud is fraud. Now, to be realistic, New York state level penalties are going to be lower than the federal penalties. If you look at the federal guidelines, Bannon likely was looking at something in the seven to nine year range. It depends on a few variables. Under the state, for a fraud like this one, it looks like he’s looking at more of a four year maximum. So it’s better for Bannon to be charged in the state as opposed to federally. But when it comes to justice, a state charge is certainly preferable to no charge at all, which leads me to the third issue.

Should the Manhattan DA charge? Let me posit this question. Is it the job of prosecutors in our system of constitutional checks and balances to try to undo or evade or avoid or work around a presidential pardon? There is an argument. It’s a reasonable argument that no, it’s not the job of prosecutors to do this. Again, let’s take Donald Trump and Steve Bannon out of it because they’re both controversial figures that evoke strong feelings either way.

But think instead about a criminal defendant who maybe you would be sympathetic to, a person maybe you think was wrongly targeted or overcharged or over sentence. Is it okay for prosecutors to plan and strategize around the pardon to ask, what if there’s a pardon or how do we respond to this pardon that just came out> I’m not so sure. The argument would be the job of the prosecutor is to charge and prosecute cases and the job of the president, separately, is to issue pardons as he sees fit. You may not like it, but your issue then would be really with the constitution.

Let’s be clear here, but for the Trump pardon of Steve Bannon, there’s no way on earth the Manhattan DA would be considering charging him. This is clearly a response, a countermove to the Trump pardon. But I also understand the other side of this one. That simply put is that it’s just an unacceptable injustice for Steve Bannon to get to walk away from this case scot free. If the Manhattan DA, if state prosecutors, if the Manhattan DA don’t take action, Steve Bannon, first of all, will never be punished. He’ll never go to jail for this.

While in all likelihood, the other three defendants will. They’re now looking at trials in the Southern District of New York. Their odds are not good and that’s just tough to swallow from the overall perspective of justice. How can we see these three defendants be punished and potentially imprisoned and Steve Bannon just walk? The other thing is if state prosecutors don’t act, Steve Bannon doesn’t even have to repay the victims who he ripped off. Sure, they could sue him in civil court. That’s a long process. I’m not sure what the incentives would be. But there’s no criminal restitution. So essentially, Steve Bannon would get to keep the money that he stole from these folks.

So my bottom line here is this, Donald Trump bailed out Steve Bannon for a time, but now it looks like Bannon will have to face justice for his theft and his greed after all. On balance, that’s a good thing for the victims, for the people who got ripped off and for our system of justice.

Thanks for listening to another episode of Third Degree. We’re coming back with another episode on Wednesday, and then again on Friday, we’ll be bringing back another of our law student co-hosts. If you have any thoughts, questions, or comments, please keep them coming into us at letters@cafe.com.

Hey everyone, every Friday on Third Degree, I talk with a rotating cast of some of the nation’s top law students about breaking legal news, compelling cases and what it means to lead a life and a career in the law. Those Friday conversations will soon become part of the CAFE Insider membership. The Monday and Wednesday episodes will continue to be available for free in this feed. CAFE Insiders enjoy access to exclusive content, including the CAFE Insider Podcast, hosted by Preet Bharara and Anne Milgram, audio essays from CAFE’s slate of contributors including me, bonus content from Stay Tuned and Doing Justice and special live events. You can try out the membership free for two weeks. Just head to cafe.com/insider. That’s cafe.com/insider. College students with a valid .edu email, you can sign up at a lower rate at cafe.com/student. That’s cafe.com/student.

Third Degree is presented by CAFE Studios. Your host is Elie Honig. The executive producer is Tamara Sepper. The senior producer is Adam Waller. The technical director is David Tatasciore. The audio and music producer is Nat Wiener. The CAFE team is Matthew, Billy David Kurlander, Ozer-Staton, Noa Azulai, Jake Kaplan, Geoff Isenman, Chris Boylan, Sean Walsh, Margot Maley.