Skepticism about the Bannon Indictment

Joe Biden’s campaign spokeswoman could barely contain her glee at the news that Steve Bannon is being indicted by the Southern District of New York on a variety of fraud allegations related to fundraising for “We Build the Wall,” telling USA Today that “no one needed an indictment to know that Steve Bannon is a fraud.”  But a close reading of the indictment shows that the politicization of the DOJ by elements of the radical left has been its own long-running fraud.

Steve Bannon at CPAC in 2017

Photo credit: Michael Vadon, licensed under the Creative Commons Atrribution 2.0

 

A good friend of mine and former employer, Congressman Steve Stockman, received a federal ten-year prison sentence for crimes he did not commit, in a trial that was a circus. He received horrible legal counsel at trial because most federal criminal defense attorneys are not prepared for a political trial. Similarly, Gen. Michael Flynn pled guilty on the advice of counsel to crimes he did not commit due to a setup that uncovered notes now revealed was instigated by former President Obama while in office,  and he struggles now simply to have the charges dismissed even though the prosecutors are on his side. The federal judicial process is so broken for defendants caught in its web that it often seems to even the innocent that the only option is to accept any plea.

The plea rate in federal criminal cases is 95%, the conviction rate for the few cases that go to trial is similarly around 95%. The conviction rate in the Soviet Union was only four points higher.

During the Stockman trial, I saw the federal prosecutor’s tactics up close. I saw them threaten people to comply with their demands to testify or else they would face prosecution. When I wouldn’t talk to them, as an attorney involved in the case, they called the Sheriff on my wife when they knew I was out of the house, asking for the locals to investigate possible child endangerment. I knew people who had years of tax problems that mysteriously went away once they testified the right way. These are the tactics they deploy regularly to get the testimony they want, guaranteeing the sky-high conviction rate.

As an attorney, I regularly interact with people who have varying degrees of knowledge about the law. Many know that specific crimes have specific elements that have to be met before you are guilty of a crime. You can’t be guilty of an assault if there was no contact and someone didn’t perceive the threat, for example. But for federal fraud, interestingly, there are no elements. Federal fraud also has no model jury instructions, because courts want prosecutors to have the flexibility to capture complex schemes. The effect of this fluidity, then, is to empower prosecutors who want to go after someone for political reasons, to have the disposable catch-all law to do it with, since federal fraud effectively becomes any financial transaction that federal prosecutors don’t like.

The indictment says that “We Build the Wall” raised $30 million. It claims Bannon took around $1 million to a non-profit he controls. It then says that he paid his personal expenses with some of the funds, even though the organization said it was a “volunteer organization.” That could be as simple as “We Build the Wall” paying Bannon’s non-profit for fundraising services and paying Bannon for his expenses. Can a “volunteer organization” occasionally pay people for work above and beyond the call of a volunteer? Of course, they can, but federal prosecutors will use that nonsense stretch to claim it was effectively defrauding donors because Bannon was actually being paid.

Should a person involved with a non-profit incriminate himself if he tells the public that an organization is a volunteer one even if some people are paid? If one says that all funds go to the mission of the organization, don’t the fundraising needs of the organization fulfill that mission? The implications of saying no effectively open almost every operating non-profit of any size to selective prosecution.

In a non-politicized judiciary, the question would be whether any donors made their donation relying on that statement, which almost assuredly they did not. The statement is not “material” and the “reliance” by the donor is likely near-zero. But again, from the example of Steve Stockman, the two donors involved in that case both said they didn’t care how the money was spent, didn’t check in on it, and wouldn’t have anyway because the amounts were so small. In political trials the facts don’t matter, and Bannon, as with Stockman, will suffer from a media avalanche of criticism swaying the jury and judge to push him into prison.

Think of it in the practical way it probably appeared to the potential donors: if a donation screen said “Thank you for supporting our volunteer organization, we will use 100% of your donations for our mission!” Would it be fraud if the donor donated, not knowing fundraisers were being paid, and that some donations went to other legitimate administrative expenses?  Any reasonable person would say no.

There is also a legal distinction, with little practical difference, between a board member and a director. A board member may be unpaid insofar as they are doing board work. But if a Director or a vendor is doing other work, specialized work, they may be entitled to compensation. There is a very reasonable defense that compensated individuals were performing other paid work while still remaining 100% unpaid for their board work, since those are two different jobs.

It can be tempting to think that Bannon can defend himself, he’s famous, he’s cashed in on some of his fame. But the range of resources that federal authorities can put on someone is unparalleled, legally collecting evidence for use at trial and illegally obtaining more evidence that it uses to pressure defendants, make threats, and intimidate witnesses. For some reason, people think that the surveillance state is not available to federal prosecutors. Inconsistent prior testimony by federal witnesses, so-called Giglio material, gets turned over to the defense at trial in a stack of papers, I’ve spoken with attorneys who don’t have time to read them.

Evidence that is supposed to suggest the innocence of a defendant is also supposed to be turned over to the defense prior to trial, so-called Brady material. Yet in many political cases, such as the 2008 Ted Stevens prosecution, it only emerged after the jury returned a guilty verdict -- after an internal FBI whistleblower came forward out of guilt. It’s very unlikely Steve Bannon can rely on exonerating evidence and inconsistent witness statements coming forward in time to avoid a conviction.  And if he takes a plea, he’ll never see it.

The defense against these ongoing persecution prosecutions is an informed skeptical public reading between the lines. If Bannon had bought a Lamborghini with his funds, the indictment would have said so. If Bannon had spent it on cocaine and strippers after coming back from the Ukraine and impregnating a stripper in Arkansas, the indictment would have said so.  All it says is that he used it on personal expenses.  

At one point in the Stockman trial, they were complaining to the jury that Steve paid off a credit card bill that included $8 charges at a Wendy’s drive-thru. They complained about a 2013 credit card payment from a dolphin ride from 2008 in their 2018 indictment.  That’s how far back they had to go to find spending they could make salacious material for the media, judge, and jury. They failed to mention the actual cost was $73.

Anyone who thinks that abuses by a trial court will be corrected by appellate courts is likely unaware that around 5% of federal criminal appeals are granted any relief whatsoever. The narrow band of arguments the appellate court considers worthy of review are usually limited to legal esoterica, such as the grammar of jury instructions, and very rarely what the public would consider actual due process violations during the proceedings.

So, for instance, no attorney involved in the Stockman trial cared to complain that the charges made no legal sense, that Stockman did not personally benefit from the funds raised, that the funds expended were spent on legitimate non-profit activity, or that the actions by a former campaign staffer in mailing out a newspaper critical of John Cornyn was not fraud or that the check that donor Ed Uihlein made to the USPS was not “mail fraud” and that the thank you letter that the staffer sent to Uihlein was not its own separate count of “mail fraud” and that someone cashing the check was not “wire fraud.”

Another indication of how bogus these charges are is that it does not appear as though any actual donor to the organization was complaining. The indictment reveals no chain of donor complaints or state Attorneys General trying to investigate.  Most fraud’persecutions by federal authorities really belong in state courts at best and do not rise to the occasion of federal court. The problem with that is that the process penalties are not as large in state court; you don’t face a 25-year sentence for mailing a check or moving money between a checking and a savings account, in a simple accusation of theft, conversion, embezzlement, in a state court. The glaring reason this case is in federal court, especially the notoriously political Southern District of New York, is because of politics.

Steve Bannon may be guilty, or he may be innocent of the charges.  He may also be innocent or guilty of other unindicted conduct. But no one should think that innocence will save him from conviction or prison; just ask Steve Stockman. After all, Bannon faces essentially the same odds in New York as he would have had under the Soviet judiciary.

Joe Biden’s campaign spokeswoman could barely contain her glee at the news that Steve Bannon is being indicted by the Southern District of New York on a variety of fraud allegations related to fundraising for “We Build the Wall,” telling USA Today that “no one needed an indictment to know that Steve Bannon is a fraud.”  But a close reading of the indictment shows that the politicization of the DOJ by elements of the radical left has been its own long-running fraud.

Steve Bannon at CPAC in 2017

Photo credit: Michael Vadon, licensed under the Creative Commons Atrribution 2.0

 

A good friend of mine and former employer, Congressman Steve Stockman, received a federal ten-year prison sentence for crimes he did not commit, in a trial that was a circus. He received horrible legal counsel at trial because most federal criminal defense attorneys are not prepared for a political trial. Similarly, Gen. Michael Flynn pled guilty on the advice of counsel to crimes he did not commit due to a setup that uncovered notes now revealed was instigated by former President Obama while in office,  and he struggles now simply to have the charges dismissed even though the prosecutors are on his side. The federal judicial process is so broken for defendants caught in its web that it often seems to even the innocent that the only option is to accept any plea.

The plea rate in federal criminal cases is 95%, the conviction rate for the few cases that go to trial is similarly around 95%. The conviction rate in the Soviet Union was only four points higher.

During the Stockman trial, I saw the federal prosecutor’s tactics up close. I saw them threaten people to comply with their demands to testify or else they would face prosecution. When I wouldn’t talk to them, as an attorney involved in the case, they called the Sheriff on my wife when they knew I was out of the house, asking for the locals to investigate possible child endangerment. I knew people who had years of tax problems that mysteriously went away once they testified the right way. These are the tactics they deploy regularly to get the testimony they want, guaranteeing the sky-high conviction rate.

As an attorney, I regularly interact with people who have varying degrees of knowledge about the law. Many know that specific crimes have specific elements that have to be met before you are guilty of a crime. You can’t be guilty of an assault if there was no contact and someone didn’t perceive the threat, for example. But for federal fraud, interestingly, there are no elements. Federal fraud also has no model jury instructions, because courts want prosecutors to have the flexibility to capture complex schemes. The effect of this fluidity, then, is to empower prosecutors who want to go after someone for political reasons, to have the disposable catch-all law to do it with, since federal fraud effectively becomes any financial transaction that federal prosecutors don’t like.

The indictment says that “We Build the Wall” raised $30 million. It claims Bannon took around $1 million to a non-profit he controls. It then says that he paid his personal expenses with some of the funds, even though the organization said it was a “volunteer organization.” That could be as simple as “We Build the Wall” paying Bannon’s non-profit for fundraising services and paying Bannon for his expenses. Can a “volunteer organization” occasionally pay people for work above and beyond the call of a volunteer? Of course, they can, but federal prosecutors will use that nonsense stretch to claim it was effectively defrauding donors because Bannon was actually being paid.

Should a person involved with a non-profit incriminate himself if he tells the public that an organization is a volunteer one even if some people are paid? If one says that all funds go to the mission of the organization, don’t the fundraising needs of the organization fulfill that mission? The implications of saying no effectively open almost every operating non-profit of any size to selective prosecution.

In a non-politicized judiciary, the question would be whether any donors made their donation relying on that statement, which almost assuredly they did not. The statement is not “material” and the “reliance” by the donor is likely near-zero. But again, from the example of Steve Stockman, the two donors involved in that case both said they didn’t care how the money was spent, didn’t check in on it, and wouldn’t have anyway because the amounts were so small. In political trials the facts don’t matter, and Bannon, as with Stockman, will suffer from a media avalanche of criticism swaying the jury and judge to push him into prison.

Think of it in the practical way it probably appeared to the potential donors: if a donation screen said “Thank you for supporting our volunteer organization, we will use 100% of your donations for our mission!” Would it be fraud if the donor donated, not knowing fundraisers were being paid, and that some donations went to other legitimate administrative expenses?  Any reasonable person would say no.

There is also a legal distinction, with little practical difference, between a board member and a director. A board member may be unpaid insofar as they are doing board work. But if a Director or a vendor is doing other work, specialized work, they may be entitled to compensation. There is a very reasonable defense that compensated individuals were performing other paid work while still remaining 100% unpaid for their board work, since those are two different jobs.

It can be tempting to think that Bannon can defend himself, he’s famous, he’s cashed in on some of his fame. But the range of resources that federal authorities can put on someone is unparalleled, legally collecting evidence for use at trial and illegally obtaining more evidence that it uses to pressure defendants, make threats, and intimidate witnesses. For some reason, people think that the surveillance state is not available to federal prosecutors. Inconsistent prior testimony by federal witnesses, so-called Giglio material, gets turned over to the defense at trial in a stack of papers, I’ve spoken with attorneys who don’t have time to read them.

Evidence that is supposed to suggest the innocence of a defendant is also supposed to be turned over to the defense prior to trial, so-called Brady material. Yet in many political cases, such as the 2008 Ted Stevens prosecution, it only emerged after the jury returned a guilty verdict -- after an internal FBI whistleblower came forward out of guilt. It’s very unlikely Steve Bannon can rely on exonerating evidence and inconsistent witness statements coming forward in time to avoid a conviction.  And if he takes a plea, he’ll never see it.

The defense against these ongoing persecution prosecutions is an informed skeptical public reading between the lines. If Bannon had bought a Lamborghini with his funds, the indictment would have said so. If Bannon had spent it on cocaine and strippers after coming back from the Ukraine and impregnating a stripper in Arkansas, the indictment would have said so.  All it says is that he used it on personal expenses.  

At one point in the Stockman trial, they were complaining to the jury that Steve paid off a credit card bill that included $8 charges at a Wendy’s drive-thru. They complained about a 2013 credit card payment from a dolphin ride from 2008 in their 2018 indictment.  That’s how far back they had to go to find spending they could make salacious material for the media, judge, and jury. They failed to mention the actual cost was $73.

Anyone who thinks that abuses by a trial court will be corrected by appellate courts is likely unaware that around 5% of federal criminal appeals are granted any relief whatsoever. The narrow band of arguments the appellate court considers worthy of review are usually limited to legal esoterica, such as the grammar of jury instructions, and very rarely what the public would consider actual due process violations during the proceedings.

So, for instance, no attorney involved in the Stockman trial cared to complain that the charges made no legal sense, that Stockman did not personally benefit from the funds raised, that the funds expended were spent on legitimate non-profit activity, or that the actions by a former campaign staffer in mailing out a newspaper critical of John Cornyn was not fraud or that the check that donor Ed Uihlein made to the USPS was not “mail fraud” and that the thank you letter that the staffer sent to Uihlein was not its own separate count of “mail fraud” and that someone cashing the check was not “wire fraud.”

Another indication of how bogus these charges are is that it does not appear as though any actual donor to the organization was complaining. The indictment reveals no chain of donor complaints or state Attorneys General trying to investigate.  Most fraud’persecutions by federal authorities really belong in state courts at best and do not rise to the occasion of federal court. The problem with that is that the process penalties are not as large in state court; you don’t face a 25-year sentence for mailing a check or moving money between a checking and a savings account, in a simple accusation of theft, conversion, embezzlement, in a state court. The glaring reason this case is in federal court, especially the notoriously political Southern District of New York, is because of politics.

Steve Bannon may be guilty, or he may be innocent of the charges.  He may also be innocent or guilty of other unindicted conduct. But no one should think that innocence will save him from conviction or prison; just ask Steve Stockman. After all, Bannon faces essentially the same odds in New York as he would have had under the Soviet judiciary.