“But whether you try to implement some or all of these
recommendations, there must be someone committed to follow-up.
There must be a review mechanism, and a means of holding people
accountable after any final decisions are made. If you do not
make some hard choices now and
ensure they are carried out, they almost certainly
will be made for you.”
— attorney Elizabeth Kingsley of
Harmon, Curran, Spielberg Eisenberg LLP, in a prophetic legal
memo to ACORN dated June 19, 2008, the day before ACORN’s
national board ousted ACORN founder organizer Wade
Rathke.
ACORN’s lawyer warned ACORN 15 months ago to begin fixing its
massive internal problems or face certain catastrophe. ACORN
didn’t listen. It let the problems fester.
The advice from Elizabeth Kingsley of Harmon, Curran,
Spielberg Eisenberg LLP came in the form of an eerily prophetic
legal memo to ACORN dated June 19, 2008, the day before ACORN’s
national board
fired disgraced founder Wade Rathke.
The memo is a kind of Holy Grail for ACORN researchers. One
source of mine keeps a copy in a safety deposit box. I’ve lost
track of how many people have asked me over the last year if I
knew how to get a hold of it. One source told me yesterday that
there are many people who would “kill” to gain possession of it.
This is a bit of an exaggeration perhaps, but not much.
In articles by investigative reporter Stephanie Strom, the
New York Times has published
excerpts of the document. Incidentally, aspects of the Old
Gray Lady’s coverage of ACORN were top-notch last year until
management made
a conscious decision to suppress Strom’s reporting before
Election Day, apparently for political reasons.
Bearing the subject line “Initial Report on Organizational
Review,” the Kingsley memo is addressed to ACORN and major
affiliates ACORN Beneficial Association, ACORN Housing Corp.,
ACORN Institute, ACORN Votes, American Institute for Social
Justice, Citizens Consulting Inc., Citizens Services Inc.,
Communities Voting Together, Pennsylvania Institute for Community
Affairs Inc., and Project Vote (formal name: Voting for America
Inc.).
The complete memo will be posted at Andrew Breitbart’s
BigGovernment.com
later today. It consists of sequentially numbered
pages, but one page — page 14 — is missing, so in my file page
13 abruptly jumps to page 15. My source, who insists on
anonymity, says the document arrived in that form via a fax
machine. I have not retouched or altered the document in any way
except where I superimposed the logo of the think tank I work
for, Capital Research
Center.
Underscoring how important the document is to ACORN, all
pages except the first page bear lawyerly caveats at the top:
“Sensitive Report — Do Not Distribute Beyond Initial Recipient
List.” Perhaps that’s community organizer-speak for “TOP
SECRET.”
The Kingsley memo paints a picture of a once-proud activist
conglomerate in utter meltdown and confirms some of the most
serious allegations about ACORN now being heard on Capitol
Hill.
The problems within ACORN, she admits, are systemic.
Kingsley explains that her concerns fall into four major
categories: “respect for corporate integrity, the necessary
separation between different types of political work, the
niceties of 501(c)(3) tax compliance and accounting for those
funds, and a big-picture question about organizational capacity.”
She goes to great pains explaining that she is not trying to
single any person out, “but to point to systemic institutional
concerns.”
Americans who follow the news know that the activities of
the ACORN network, a tangled mess of interlocking directorates
and affiliated tax-exempt groups that routinely swap seven-figure
checks, have long cried out for a probe under federal
racketeering laws. The undercover prostitution sting videos that
began popping up at BigGovernment.com in mid-September made
America intensely interested in ACORN for the first time. While
the mainstream media is now covering ACORN, kind of, sort of, no
longer can ACORN be said to be the exclusive preserve of Fox News
Channel and conservative talk show hosts.
In her reference manual for left-wing activists, The
Practical Progressive, Erica Payne reports
ACORN’s total 2008 budget was $50 million. Surely that figure is
too low.
The network has taken in at least $107 million in donations
and $53 million in federal funds since 1993, yet it owes millions
of dollars in back taxes and is eligible for up to $8.5 billion
in federal funding this year.
No one really knows how big the entire ACORN network’s
budget is. One of the reasons is that tracking housing and
community development grants administered by the U.S. Department
of Housing and Urban Development (HUD) is difficult. HUD often
distributes the money to states and localities, which then allot
the funds to many different nonprofit groups. Getting a total
financial picture would require enlisting an army of Freedom of
Information Act requesters.
Kingsley seems to confirm my assertion that there is no
meaningful distinction, no discernible institutional firewalls
that separate ACORN and its hundreds of tax-exempt nonprofit
affiliates:
There is no point in having these different corporations
in place if they are not respected. If not properly operated,
they create difficulties (e.g., potential conflicts of interest
for lawyers, non-trivial administrative burden of state
filings, and the appearance that someone is trying to hide
something under a byzantine corporate structure) without
generating the desired benefits, whatever those may be.
This is “the natural result of thinking of all these
different corporations as part of the family, or ‘us,’” she
writes.
Key ACORN affiliates argue they are not “‘affiliated,’
‘related,’ or ‘controlled’ by or with each other, for various
legal purposes, while allowing actual control to be exercised in
a highly coordinated manner,” she writes. ACORN suffers from “an
organizational culture that resembles a family business more than
an accountable organization.”
She argues “it may be time to consider whether direct
governance control and/or acknowledged connections are
appropriate, rather than trying to pretend that these groups are
not connected to one another and create control mechanisms behind
the scenes.”
“The IRS says that it cares about governance because it
finds good governance linked to legal compliance, and slip-shod
or absent governance and internal accountability are red-flags
for tax and other legal problems,” Kingsley counsels. “In this
case, the IRS is right.”
She highlights the following policies or the lack of such
policies:
• Whistle blower policy
[priority: CRITICAL]
• Document retention and destruction policy (simple
version prohibiting illegal destruction of documents)
[priority: URGENT]
• Contemporaneous documentation of Board and Committee
meetings [priority: URGENT]
• Conflicts of interest policy [priority:
IMPORTANT]
• Documented process for determining compensation for the
CEO and any other officers or key employees [priority:
IMPORTANT]
Apparently ACORN doesn’t follow best practices.
Kingsley hits ACORN for its incestuous hiring practices.
“Also, though we have not created a draft policy at this point,
all corporations with staff should adopt an appropriate
anti-nepotism policy,” she writes. But don’t go overboard.
This is not to suggest a draconian policy that does not
permit hiring of related people…But a minimal responsible
policy would probably require that immediate family members or
people in a domestic partnership or dating relationship not be
one another’s direct supervisors.… Critically, all staff must
be required to recuse themselves from any decisions relating to
the employment of their relatives.
Who knew ACORN headquarters on Elysian Fields Avenue in New
Orleans was Animal House!
Founder Wade Rathke might have been wise to adopt an
anti-nepotism policy. His brother Dale embezzled $948,000 from
ACORN while working there. Even after Wade covered up the theft,
he kept Dale on the payroll for eight years. Wade’s wife, Beth
Butler, and reportedly, his two children also work at
ACORN.
Kingsley slams her client for not keeping political
activities separate from other activities. “It may be that
activities are carried out with adequate independence, but
without formal policies and separation of staff functions, there
are potential liabilities and problems of proof.”
Citizens Services Inc. (CSI), an ACORN affiliate that
received $832,598 from the Obama campaign for get-out-the-vote
work during primary season, is a prime example. Kingsley writes
that “[w]ithin both CSI and ACORN, there needs to be a formal
policy adopted and implemented and enforced that separates
independent political activity from anything coordinated with a
candidate or party.”
This was so urgent that Kingsley insisted the new policy
had to be in place “by the end of the month” or the following
month.
Kingsley also warns of the danger posed by the affiliates’
lack of proper documentation showing that the ACORN network has
been following IRS rules on nonprofit behavior. There is too much
overlap between various employees representing different
affiliates and confusion about who is controlling which funds and
this can only lead to trouble, she argues.
She warns ACORN that “merely papering the transfer of money
is not sufficient.” The nonprofits have to be able to show that
their funds were used for appropriate purposes.
She writes that ACORN Institute and American Institute for
Social Justice should not make further grants until such time as
offices with outstanding paperwork for previous grants get around
to filing the needed reports.
Suffice it to say, Kingsley lets her client know it is in
big trouble. There are further serious questions about the use of
pension funds and about the Dale Rathke embezzlement and
coverup.
The expulsion of the “ACORN 8,” a group of national board
members kicked out of ACORN for asking ACORN management to
produce documentation on the embezzlement, came months after the
memo. You could even say the group’s members were kicked out by
Wade Rathke’s successor, Bertha Lewis, for following Kingsley’s
advice.
I shudder to think what Kingsley would have to say about
Lewis’s flagrant abuse of power.
ACORN, as it turns out, is an ugly, corrupt organization.
It is just as bad, just as evil, as people said it was. If you
don’t believe me, ask Elizabeth Kingsley.
The Republican National Lawyers Association, which has been
in the forefront of the push to investigate ACORN, sounded just
the right note. Said RNLA president David Norcross:
“ACORN should view their current situation as an
opportunity to truly reform itself and place the interests of its
members first and they can start by re-examining the report by
Elizabeth Kingsley and addressing the malfeasance and dysfunction
running rampant within their organization.”
