President Donald Trump’s former chief strategist Steve Bannon pleaded not guilty to charges that he ripped off donors to an online fundraising scheme to build a southern border wall.

He made his plea in federal court, hours after he was pulled from a yacht off the coast of Connecticut and arrested.

He and three others were charged in an indictment unsealed in Manhattan federal court.

At his hearing the same day, Bannon had his hands cuffed in front of him while a large, white mask covered most of his face.

He rocked back and forward as he sat on a chair in a holding cell at Manhattan federal court, from where he appeared via video as his lawyers were on the telephone.

The We Build The Wall fundraiser was headed by men who pushed their close ties to President Trump, giving their effort a legitimacy that helped them raise more than 25 million US dollars.

But according to the criminal charges unsealed Thursday, much of the money never made it to the wall.

Instead, it was used to line the pockets of group members, including Mr Bannon, who served in Trump’s White House and worked for his campaign.

He allegedly took over one million US dollars, using some to secretly pay co-defendant Brian Kolfage, the founder of the project, and to cover hundreds of thousands of dollars in personal expenses.

The arrests make Bannon the latest addition to a startlingly long list of Trump associates who have been prosecuted, including his former campaign chairman, Paul Manafort, whom Bannon replaced, his long-time lawyer, Michael Cohen, and his former national security adviser, Michael Flynn.

Mr Trump has also made clear that he is willing to use his near-limitless pardon power to help political allies escape legal jeopardy, most recently commuting the sentence of longtime political adviser Roger Stone.

Bannon was taken into custody around 7am by the US Postal Inspection Service on a 150-foot luxury yacht called Lady May, which was off the coast of Connecticut, authorities said.

The boat is owned by exiled Chinese billionaire Guo Wengui and currently for sale for nearly 28 million US dollars.

Neither Bannon, nor his spokeswoman or lawyer responded to requests for comment.

Kolfage did not respond either.

Also charged were Andrew Badolato and Timothy Shea, the owner of an energy drink company called Winning Energy.

The company’s cans feature a cartoon superhero image of Mr Trump and claim to contain “12 oz. of liberal tears”.

Other prominent members of the wall group included former Kansas Secretary of State Kris Kobach, its general counsel; Erik Prince, founder of the controversial security firm Blackwater; former Republican Representative Tom Tancredo of Colorado; and former major league baseball pitcher Curtis Schilling.

They were not named in the indictment.

Mr Trump quickly distanced himself from Bannon while claiming he knew nothing about the project and never believed in a privately financed barrier.

“When I read about it, I didn’t like it. I said this is for government, this isn’t for private people. And it sounded to me like showboating,” he told reporters at the White House, adding that he felt “very badly” about the situation.

An immigration plan unveiled by Trump last year included a proposal to allow the public to donate toward his long-promised wall, as the Kolfage group had originally said was its mission before changing it to private construction of their own wall.

But Mr Trump later denounced the project publicly, tweeting last month that he “disagreed with doing this very small (tiny) section of wall, in a tricky area, by a private group which raised money by ads” and claiming: “It was only done to make me look bad.”

Attorney General William Barr said he had been made aware of the investigation into Bannon months ago but did not say whether the president had been informed.

According to the indictment, the defendants used fake invoices, another nonprofit and sham vendor arrangements to try to hide their efforts to siphon money.

Under the arrangement, Bannon and his co-defendants allegedly paid Kolfage 100,000 US dollars up front and an additional 20,000 US dollars monthly, all while claiming they served as volunteers and that Kolfage was not paid.

The indictment said Kolfage “went so far as to send mass emails to his donors asking them to purchase coffee from his unrelated business, telling donors the coffee company was the only way he ‘keeps his family fed and a roof over their head’.”

Kolfage eventually spent some of the over 350,000 US dollars he received on home renovations, payments toward a boat, a luxury SUV, a golf cart, jewellery, cosmetic surgery, personal tax payments and credit card debt.

Originally called We The People Build The Wall, the campaign launched in December 2018 and raised approximately 17 million US dollars in its first week.

But it soon drew scrutiny.

The crowdfunding site that hosted it suspended the campaign and warned that it would return donations unless the money was transferred to a legitimate nonprofit.

Bannon was brought in around that time.

It originally promoted a project for three miles of fence posts in South Texas that was ultimately built and largely funded by Fisher Industries, which has received about two billion US dollars in funding for wall contracts.

The company’s chief executive, Tommy Fisher, did not respond to calls for comment.

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