FILE - In this Nov. 8, 2019 file photo, former White House strategist Steve Bannon arrives to testify at the trial of Roger…
FILE - Former White House strategist Steve Bannon arrives to testify at the trial of Roger Stone, at federal court in Washington, Nov. 8, 2019.

WASHINGTON - Steve Bannon, a former senior adviser to President Donald Trump, and three associates were arrested Thursday on charges of defrauding hundreds of thousands of donors seeking to help finance part of a wall along the U.S.-Mexico border, the Justice Department announced.

Bannon, who was CEO of Trump’s 2016 presidential campaign and later his top White House strategist, along with Brian Kolfage, Andrew Badolato and Timothy Shea, were described by prosecutors as the leaders of We Build The Wall, an initiative that raised more than $25 million in private donations to help the Trump administration build the border wall.

Bannon pleaded not guilty in federal court in New York. He was released on $5 million bail, with restrictions that include no international travel and no use of private airplanes or yachts or boats.

Bannon was taken into custody on a 150-foot (45-meter) yacht called Lady May off the coast of Connecticut by the U.S. Postal Inspection Service, authorities said. The boat is owned by exiled Chinese billionaire Guo Wengui, according to the Associated Press.

“This entire fiasco is to stop people who want to build the wall,” Bannon said as he left the courthouse.

William Burck, an attorney for Bannon, did not respond to VOA’s repeated requests for comment.

Kolfage, an Air Force veteran and triple amputee, launched the fundraiser on the GoFundMe crowdfunding website in 2018, enlisting Bannon, Badolato and Shea in the effort.

Badolato is described in court documents as an entrepreneur and venture capitalist who worked on a nonprofit organization with Bannon.

Shea, of Castle Rock, Colorado, allegedly ran a shell company to receive payments from the group and then funneled them to its founder. Shea’s wife, Amanda, allegedly was the group's chief financial officer.

In an indictment unsealed Thursday, prosecutors alleged that the four siphoned off hundreds of thousands of dollars in donor funds for personal use, while telling donors that all their money would be spent on building the wall. 

"As alleged, the defendants defrauded hundreds of thousands of donors, capitalizing on their interest in funding a border wall to raise millions of dollars, under the false pretense that all of that money would be spent on construction," Audrey Strauss, acting U.S. Attorney for the Southern District of New York, said in a statement announcing the charges.    

Email queries to a spokeswoman for We Build the Wall, Badolato, and Shea's wife, Amanda, went unanswered.   

Although the group has long claimed the backing of the Trump administration, Trump distanced himself from the privately funded project. Speaking to reporters Thursday at the White House, the president said he didn't like the project and that it was "for showboating."    

"I said, 'This is for the government. This isn't for private people,'" Trump said.

WATCH: President Trump reacts to Bannon indictment, arrest

Last year, the group claimed that the acting secretary of Homeland Security had "praised" the project. The Department of Homeland Security did not immediately respond to VOA's request for comment.

Bannon is the sixth former Trump campaign associate to face federal charges. He was fired in August 2017, seven months after Trump took office, but continues to support the president.    

Trump called Bannon's arrest "a very sad thing" and "surprising," adding that he did not know the others involved in the fundraising campaign.    

Called "We the People Build the Wall," the fundraiser was launched in December 2018 at a time when Trump was unable to secure billions of dollars from Congress to make good on a key campaign pledge to build a wall on the U.S.-Mexico border.   

Supporters of the border wall project rallied around it. Trump's eldest son, Donald Trump Jr, appeared with Kolfage, praising the project as "private enterprise at its finest."  

In addition to Bannon, fundraising campaign advisory board members included Erik Prince, founder of the private security company Blackwater and brother of Education Secretary Betsy DeVos; Kris Kobach, a former Kansas secretary of state and immigration hard-liner; and former Major Baseball League pitcher Curt Schilling.  

The campaign had an initial goal of raising $1 billion and promised to give all donations to the Trump administration to build the wall. Within its first week, the campaign raised more than $17 million, as thousands of donors gave money.  

Kolfage once claimed that if every Trump supporter donated $80, the group could build a wall along the entirety of the U.S.-Mexico border. 

FILE - People work at a portion of border wall under construction in Yuma, Arizona, Jan. 10, 2020.

"We've proven now that we can build the wall," Kolfage told right-wing website The Gateway Pundit last year, referring to two small stretches of border fencing the group funded in New Mexico and Texas. 

Within weeks of the initiative's launch, however, GoFundMe suspended the campaign amid questions over Kolfage's background and the campaign's pledge to give the funds to the Trump administration.   

In order to get GoFundMe to release the money, Bannon, Badolato and Kolfage allegedly set up a nonprofit organization to receive the funds with "the modified purpose of the private construction" of the wall, according to the indictment.  

Kolfage and Bannon "repeatedly and falsely assured the public that Kolfage would 'not take a penny in salary or compensation' and that '100% of the funds raised … will be used in the execution of our mission and purpose' because, as Bannon publicly stated, 'We're a volunteer organization,'" according to the indictment.   

"Those representations were false," the indictment said.   

Between them, the four men allegedly misappropriated hundreds of thousands of donor funds to spend on travel, hotels, consumer goods and to pay credit card debt, according to the indictment.  

In Kolfage's case, the decorated veteran allegedly "covertly" took more than $350,000 in donations to pay for a boat, a luxury SUV and other items, while Bannon funneled more than $1 million into a nonprofit he controlled, paying for personal expenses.   

The indictment alleges that after Kolfage, Bannon and Badolato learned from an unidentified financial institution that their nonprofit group might be under federal criminal investigation, they "took additional steps to conceal the fraudulent scheme, with two of them using an encrypted messaging app to communicate with each another.  

Each of the four men was charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Each count carries a maximum penalty of 20 years in prison.