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WASHINGTON – President Donald Trump’s former adviser Steve Bannon has been arrested on charges related to a fundraising scheme that prosecutors say defrauded hundreds of thousands of people who donated to a crowdfunding campaign aimed at building a wall on the U.S.-Mexico border.

Federal authorities including the U.S. Postal Inspection Service arrested Bannon, 66, on Thursday morning, along with entrepreneur Andrew Badolato, 56, Timothy Shea, 49, and We Build the Wall founder Brian Kolfage, 38.

Update 5:07 p.m. EDT Aug. 20: Steve Bannon pleaded not guilty to charges related to a fundraising scheme aimed at building a border wall on the border between the United States and Mexico.

Bannon, a former adviser to President Donald Trump, made his plea in Manhattan federal court, according to The Associated Press. A magistrate judge approved Bannon’s release on $5 million bail, which was secured by $1.75 million in assets, the AP reported.

Original report: Acting U.S. Attorney Audrey Strauss said in a statement Thursday that 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.”

“While repeatedly assuring donors that Brian Kolfage, the founder and public face of We Build the Wall, would not be paid a cent, the defendants secretly schemed to pass hundreds of thousands of dollars to Kolfage, which he used to fund his lavish lifestyle,” Strauss said.

In an indictment unsealed Thursday, authorities said Kolfage “covertly took more than $350,000″ of the more than $25 million raised by the campaign.

In addition, “(Bannon), through a non-profit organization under his control … received over $1,000,000 from We Build the Wall, which (Bannon) used to, among other things, secretly pay (Kolfage) and to cover hundreds of thousands of dollars in (Bannon’s) personal expenses,” according to the indictment.

Authorities said the defendants used fake invoices and vendor arrangements to hide money transfers through Bannon’s unnamed non-profit organization and a shell company that Shea controlled.

Trump told reporters Thursday that he wasn’t involved in We Build the Wall and that he thought it was inappropriate to use private funds for construction of the wall. Still, he said he felt “very badly” for Bannon.

“I haven’t been dealing with him for a very long period of time,” the president said, adding that the thought We Build the Wall was launched “for showboating reasons.”

In December 2018, Kolfage launched We Build the Wall as Trump grappled with Congress over funding for constructing his promised border wall. The campaign went live on GoFundMe as “We The People Will Fund The Wall” with the stated goal of raising $1 billion.

“If we can fund a large portion of this wall, it will jump start things and will be less money Trump has to secure from our politicians,” Kolfage wrote on GoFundMe in 2018. “This won’t be easy, but it’s our duty as citizens.”

Prosecutors said Kolfage involved Bannon and Badolato, a venture capitalist, into the leadership of the GoFundMe campaign a short time after it launched. Within days, officials said the pair “took significant control of the fundraising campaign’s organization and day-to-day activities, including its finances, messaging, donor outreach, and general operations.”

GoFundMe suspended Kolfage’s campaign a short while after it was launched due to concerns over plans to give the raised money to the federal government rather than a legitimate non-profit organization. Working with Kolfage, authorities said Bannon and Badolato created a non-profit called We Build the Wall Inc. to continue fundraising activities, this time with the goal of building a private wall on the southern border.

In appeals to potential donors, Kolfage, Bannon and Badolato repeatedly insisted that funds raised would go entirely toward construction.

“(Kolfage) went so far as to send mass emails to his donors asking them to purchase coffee for his unrelated business, telling donors that the coffee company was the only way ‘he keeps his family fed and a roof over their head,’ because (Kolfage) was taking ‘no compensation’ from We Build the Wall,” according to the indictment.

Authorities said some funds did go toward construction, however, “hundreds of thousands of dollars were siphoned out of We Build the Wall for the personal use and benefit of (Kolfage), (Bannon), (Badolato) and (Shea).”

Working with Bannon and Badolato, prosecutors said Kolfage “reached a secret agreement whereby (Kolfage) would be coverly paid ‘$100k upfront [and] then 20 [per] month.”

Kolfage, Bannon, Badolato and Shea have been charged with one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering. If they are convicted, they could face as many as 20 years in prison for each charge.