Editor’s Note: Elie Honig is a CNN legal analyst and former federal and state prosecutor. The views expressed in this commentary are his own. View more opinion on CNN. Watch Honig answer readers’ questions on “CNN Newsroom with Ana Cabrera” on weekends.

CNN  — 

Thursday’s federal indictment of Steve Bannon, former campaign adviser to President Donald Trump, is very bad news for Bannon – and potentially for many others.

Elie Honig

The US Attorney’s Office for the Southern District of New York (SDNY) has charged Bannon and three other defendants with a massive fraud scheme. The defendants operated a crowdfunding campaign called “We the People Build the Wall.” Its initial premise was that all donations would be handed over to the federal government to pay for construction of Trump’s long promised southern border wall between the United States and Mexico.

Instead, the indictment alleges, Bannon and his co-conspirators pocketed millions of dollars in donations and used that money to pay for their own lavish lifestyles and expenses including “travel, hotels, consumer goods, and personal credit card debts.” Bannon has been arrested and his attorney declined to comment.

The indictment itself offers clues indicating that the SDNY’s evidence is strong. The case appears to be built largely on documents; the SDNY, it seems, has the receipts. The indictment mentions that the evidence includes “fake invoices and sham ‘vendor’ arrangements,” plus documents showing how the defendants created and used empty shell corporations to try to hide the flow of money from “We the People Build the Wall” into their own pockets.

From Bannon’s perspective, it’s one thing to defend a case that turns on subtle issues of subjective intent, or that rest on testimony from other co-conspirators. But it’s much harder to defend a case based on black-and-white financial documents. A good defense lawyer can cross-examine a witness and try to take apart his story – but it’s much harder to argue with phony invoices and forged receipts.

The outlook for Bannon is bleak. He can go to trial, of course, but the vast majority of federal trials result in conviction. He can plead guilty and hope for a slightly lower sentence than if he is convicted by a jury. Largely because of the amount of the alleged] fraud – here, prosecutors say, over $25 million – Bannon, if convicted, is looking at a sentence of at least approximately seven to nine years under the federal sentencing guidelines (which are important but not binding on a judge), or slightly less if he accepts responsibility and pleads guilty.

Or Bannon can try to cooperate with the SDNY – which could offer him his best chance at a significant sentencing reduction. In my experience, the SDNY handles cooperation differently than many other prosecutors’ offices. Some prosecutors permit a defendant to cooperate only against certain defendants (typically, his indicted co-conspirators) or only on certain subject matters (usually the charge stated in the original indictment). But in the SDNY, cooperation is all-or-nothing. An SDNY cooperator must admit to every crime he has committed. And the cooperator must give up everything he knows about what others have done – even if the conduct, or the other people, go beyond the original charges in the indictment.

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If Bannon goes the cooperation route and fully comes clean, he stands to minimize his own potential prison time. But, to save himself, Bannon will very likely need to give the SDNY the ammunition it needs to take others down too.