News Roundup: The Grift Economy

The grifts that have defined the presidency of Donald Trump — both those within the administration and those cozily adjacent to it — have come in many forms, from the installation of campaign megadonors to positions of power to the funneling of taxpayer money to Trump’s real-estate business. On Thursday came the news that former Trump strategist Steve Bannon and associates had been arrested for their alleged involvement in a scheme that perfectly exemplifies the self-dealing and influence-peddling that permeates the Trump administration.

Bannon was arrested on a yacht off the coast of Connecticut (by postal inspectors, as some have noted with irony given the ongoing controversy over mail interference) for fraud and money-laundering in the We Build the Wall crowd-funding campaign. We Build the Wall sought donations from individuals for the private construction of a wall along the U.S.-Mexico border, a Trump campaign promise he has failed to deliver for his anti-immigration political base. Federal prosecutors allege that Bannon and three others, including Brian Kolfage, who founded We Build the Wall, conspired to siphon off hundreds of thousands for personal expenses from the more than $25 million in donations.

The project has drawn scrutiny from the start, though questions about its legality didn’t stop the participation of high-profile Trump supporters like Kris Kobach, the former Kansas secretary of state who co-led Trump’s now-defunct voter-fraud commission, and Erik Prince, a defense contractor (and brother of Education Secretary Betsy DeVos), on We Build the Wall’s advisory board.

Since Bannon and the other men’s arrests, the president has attempted to distance himself from the organization. But previously, Kobach has claimed that Trump gave the effort his “blessing.” And while attending an event hosted by We Build the Wall last summer, Donald Trump Jr. praised the group as “private enterprise at its finest.” 

The organization had also been working with construction company Fisher Industries, which is headed by GOP donor and Trump supporter Tommy Fisher. Last year, the Washington Post reported that the president had aggressively been pushing the Army Corps of Engineers to award a large wall-construction contract to the company; in May, Fisher Industries secured a $1.3 billion deal.

According to the Daily Beast, Kolfage was also planning to use the data he’d acquired from the wall venture — names, addresses, phone numbers — to start a Republican fundraising firm. This comes after reports in the spring indicated that, in another effort to turn a profit, Kolfage had formed a business to sell large quantities of N95 face masks.

It is also worth noting that the charges against Bannon, Kolfage, and the two other men were brought by federal prosecutors in the office of the U.S. Attorney of the Southern District of New York. The former U.S. attorney for SDNY, Geoffrey Berman, had been controversially forced out of his position in June by Attorney General William Barr, raising questions about whether Barr was attempting to interfere in that office’s investigations of various Trump associates, including those connected to Rudy Giuliani. You can see our requests for records related to We Build the Wall, Kolfage, and Fisher Industries here, and read more about our ongoing investigation into Barr’s politicization of the Justice Department here.

After three and a half years of the Trump administration, the grift continues. Read more below about what else has been going on this week.

DeJoy Testifies Friday and Monday: Postmaster General Louis DeJoy will appear before the Senate Homeland Security Committee Friday morning, where he has defended the much-denounced changes he’s overseen at the U.S. Postal Service. Earlier this week, in response to widespread outrage and concern that the changes were designed to hamper the post office’s ability to handle a surge in mail-in voting — not to mention the president’s own brazen admission that he was holding up USPS funding to make absentee voting harder — DeJoy issued a statement saying he would postpone many of the cost-cutting measures he’s imposed until after the November election. But since then, Vice has reported that the Postal Service had instructed employees across the country not to reconnect any mail-sorting machines, and NBC News published images showing many machines out of service and dismantled. 

DeJoy, a Trump donor who joined the administration in June, and his wife, Aldona Wos, who Trump nominated to be ambassador to Canada earlier this year, hold tens of millions in a logistics firm DeJoy previously ran. According to the New York Times, DeJoy received up to $7 million in income last year from the company.

On Thursday, House investigators revealed that DeJoy had not been among the candidates for the postmaster job recommended by a USPS-hired search firm, and that a top USPS official who is also a Republican donor had put forward DeJoy’s name. In congressional testimony, David Williams, the former vice chair of the USPS board of governors, accused Treasury Secretary Steven Mnuchin of using his department’s lending authority to force changes that would turn USPS into a “political tool” for the Trump administration.

We’ve been investigating political interference at the post office, and requested records of DeJoy’s communications and calendars. This month, USPS rejected our Freedom of Information Act request for his calendars, saying they were “maintained on a USPS computer” for DeJoy’s personal use and that the entries “are not agency records subject to the FOIA.” We’re appealing what Wall Street Journal reporter Ted Mann described as a “Hall of Fame FOIA denial” — the public needs to know who DeJoy has been meeting with.

DeJoy will also appear before the House Oversight Committee on Monday, where he’ll likely face some tough questions. For today, Sen. Ron Johnson, the chair of the Senate Homeland Security Committee, defended DeJoy’s record in his opening remarks — more about Johnson below.

Ethics Watchdogs Call for Investigation into Sen. Johnson’s Abuse of Office: Last week, American Oversight and the Center for Media and Democracy submitted a complaint to the Senate Select Committee on Ethics, calling for an investigation into Johnson’s advancement of discredited political attacks against Democratic presidential nominee Joseph Biden. Senate rules prohibit lawmakers from using their official positions and resources to engage in campaign activity, and Johnson is not only pushing debunked claims about Biden’s handling of U.S. policy toward Ukraine while vice president; he also appears to be using information from foreign individuals with ties to Russia, who have publicly said they were working to help get Trump reelected.

Multiple officials have testified that there was no credible or factual basis for allegations that Ukraine interfered in the 2016 election or for the efforts of Trump and Rudy Giuliani to push Ukraine to investigate Biden. And Johnson himself supported Biden’s 2016 position with regard to Ukraine.

But that hasn’t stopped Republican Senate committees led by Johnson and Sen. Chuck Grassley from advancing the discredited narrative. And further evidence of the politicized nature of those efforts is the fact that the State Department is refusing to turn over to the House Foreign Affairs Committee the very same documents it had provided to the Senate committees in their investigation. Over at Just Security, American Oversight’s Molly Claflin and Austin Evers pull apart the State Department’s nonsensical argument and explain why it shows Secretary Mike Pompeo’s and his enablers’ disdain for constitutional separation of powers.

Pompeo’s Military Housing Request Alarmed Officials: Both Politico and CNN reported this week on a memo obtained by American Oversight in our investigation into Pompeo’s housing arrangements. The memo shows a top Navy lawyer warning that the secretary’s initial request to rent a home on a military base was “problematic” for “factual, legal, fiscal, and ethical issues” and because it raised the issue of whether Pompeo would be displacing actual military officers already on the waiting list for limited housing. According to the memo, the Navy had been contacted “apparently through informal channels” about the request.

New Justice Department Documents About Rudy Giuliani’s Ukraine Efforts: American Oversight had previously uncovered records showing that Barr had in August 2019 met with Joseph diGenova, a Giuliani ally who worked with Giuliani to dig up dirt on Biden. New documents show that Barr had also requested that diGenova also meet with John Cronan, the assistant attorney general for the Justice Department’s Criminal Division.