Special Report

ACORN Housing Boom

The great rebranding continues – as do plans to put our tax dollars to work for ACORN come election time.

By 3.2.10

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As ACORN gears up to use your tax dollars to influence future elections, the U.S. Department of Housing and Urban Development is conducting a "massive" probe of ACORN Housing Corp., a source familiar with the ongoing investigation says.

A spokesman for HUD's inspector general refused to confirm or deny whether ACORN Housing was being investigated.

ACORN Housing is essential to ACORN's member recruitment program. The housing affiliate strongly encourages its clients to pay ACORN $120 a year to be part of the class struggle. Many of the ACORN employees Americans saw on the undercover prostitution sting videos last fall are actually ACORN Housing employees. ACORN Housing's website boasts that from 1986 to 2008 it counseled 338,025 clients, and originated 104,867 mortgages worth $15.5 billion.

The HUD probe comes as ACORN Housing, the best-funded of ACORN's affiliates, participates in the ACORN network-wide rebranding aimed at duping funders and the public and allowing ACORN to continue to devour government grants.

Although ACORN is now converting state chapters into new shell corporations operated out of the same old ACORN offices and staffed by many of the same people, ACORN Housing opted simply to change its name.

ACORN's latest public relations ruse may give it an opportunity to take in untold millions of taxpayer dollars under cover of darkness just in time to cause trouble during the 2012 election cycle.

The ruse consists of ACORN's effort to pass off various state chapters as "new" groups supposedly independent of ACORN. In this rebranding charade state chapters are pretending to break away from the national ACORN group and reincorporate themselves as independent organizations.

But ACORN Housing is rebranding itself a little differently. In a marketing-savvy move, ACORN Housing has been rechristened Affordable Housing Centers of America Inc., which allows the entity to continue using AHC as an acronym.

ACORN Housing is a key component of the far-flung ACORN empire of activism which has long used its housing affiliate as a piggy bank -- so it's too important to be allowed to collapse.

Although the congressionally chartered nonprofit NeighborWorks, which serves as a weigh station for HUD grants, is reportedly not setting aside any 2009 funds for ACORN Housing, in 2008 alone it awarded ACORN Housing $25,050,939 in federal funding.(The 2008 grant documents are here, here, and here.)

The $25 million-plus figure for 2008 is more than ACORN Housing took in from the federal government in a 10-year span ending in 2007. In its tax returns ACORN Housing reported taking in $23,965,756 in government funding from 1997 through 2007.

This federal funding is a problem because ACORN Housing funnels funds -- possibly including government funds -- to ACORN and other affiliates in the ACORN network. The network is notorious for its commingling of funds and it has used government resources previously for partisan political activity.

During the Clinton administration ACORN and ACORN Housing used AmeriCorps resources to give partisan speeches and assist the Clinton White House in preparing a press conference in support of legislation.

In 2007, when ACORN Housing reported taking in $5,205,527 from the government, it also made a $119,509 loan to ACORN. The same year it also paid out $496,615 to the shadowy ACORN affiliate Citizens Consulting Inc. (CCI) for "administrative services."

CCI is an essential part of the Louisiana attorney general's current investigation into ACORN. CCI is also where Dale Rathke, brother of ACORN founder Wade Rathke, worked while he embezzled $948,000 from ACORN.

Former ACORN officials describe CCI as a vortex into which money disappears never to be seen again. According to Michael McCray, former ACORN member, CCI "is basically the financial nerve center for ACORN and all its entities."

From 2000 to 2006, ACORN Housing also gave $3,803,948 in grants to the American Institute for Social Justice (AISJ), which trains budding young community organizers to go forth and agitate the proletariat. If AISJ used the money for partisan activities, federal law may have been violated.

Meanwhile, ACORN's rebranding effort will make it even more difficult than it is now to hold the left's favorite organized crime syndicate accountable.

Initially it will be a challenge to track the flow of tax dollars to the new ACORN satellites because government grants and grants distributed to sub-grantees are often difficult to trace. It may take up to two years before the newly created entities' IRS form 990s (tax returns), which disclose revenue sources and expenditures, begin to appear in publicly accessible databases such as guidestar.org.

Of course members of the public are legally entitled to appear at the offices of any nonprofit and demand copies of its 990, but brand new nonprofits don't even have to put together the tax return until they have completed their first year in operation. Moreover, many nonprofits are lax in complying with the law and short of organizing an ACORN-style sit-in in their offices to demand to see the 990 forms, the new nonprofits will be able to take their time making the required public disclosures and there will be very little anyone can do about it.

In other words, the fraudsters at ACORN may have a two-year window of opportunity to take in government money before the public finds out about it. It's probably too late for the newborn spawn of ACORN to take in much government money before this year's congressional elections, but it will have plenty of time to seek out grants before the 2012 presidential election.

ACORN is engaging in the current rebranding subterfuge because it needs the money. ACORN feels rebranding, which allows ACORN to keep tax dollars and foundation grants flowing into its coffers, is necessary because adverse publicity has dried up its revenue streams. Much of the bad ink ACORN got came as a result of the hidden camera videos last fall that showed ACORN employees helping activists who claimed they were planning to set up a brothel staffed by underage illegal aliens. The public backlash forced Congress to cut off funding to ACORN and its affiliates and scared away many high-dollar donors.

ACORN is now manufacturing new nonprofits that it falsely claims are not connected to it. Four dummy nonprofit corporations have emerged from the rebranding process so far this year.

They are Alliance of Californians for Community Empowerment, New York Communities for Change, New England United for Justice (Massachusetts), and Arkansas Community Organizations. All four groups operate out of ACORN offices and are run by ACORN staffers. The president of New England United for Justice, Maude Hurd, just happens to be the 20-year national president of ACORN, as the new group's articles of incorporation show.

For decades ACORN has maintained tight control over its supposedly independent network of affiliates through interlocking directorates and massive intra-network financial transfers. There is every indication it plans to use the same top-down management techniques under the new organizational arrangement.

ACORN veteran Marcel Reid, who also heads a reform group called ACORN 8, told me in an interview that she doesn't believe ACORN's recent claims that the breakaway groups aren't being controlled by ACORN.

"The folding of ACORN isn't happening because it's simply going to restructure," she said. "In the meantime they'll give all of these new community organizations in the states an opportunity to flourish without ACORN's legal baggage."

Reid is a whistleblower who was expelled from ACORN's national board in 2008 for asking too many uncomfortable questions about a million-dollar embezzlement perpetrated around 2000 by the brother of ACORN's founder and covered up by management for eight years.

A leaked email now posted at BigGovernment.com from ACORN's online director confirms Reid's fears. It indicates the national group will probably run out of money and shut down by year's end.

In coming days a dozen ACORN state chapters will change their names in an effort to trick the public into believing ACORN has dissolved, writes Nathan Henderson-James, director of ACORN's online campaigns.

In the email Henderson-James explains the sleight-of-hand ACORN will use to lead Americans to believe ACORN is breaking apart.

"It is definitely true that over the next week or so we should see a dozen or more organizations launched on the state level by staff who used to work for ACORN and leaders who developed their skills as ACORN members. These are not just simple name changes, but reimaginings of how best to organize low and moderate income constitiuencies [sic] without any of the legal problems and funding issues dogging ACORN, not to mention the brand damage."

It is a "tactically smart…reaction to the global situation that helps the work of building power for poor people to continue," writes Henderson-James, an ACORN employee since 1997.

"The truth is that it is hard for us to forsee [sic] any scenario where ACORN continues beyond the end of 2010 and some of us think it might not last that long," he writes in an apparently authentic Feb. 22 message. "Last one to leave turn out the lights and wipe the server," he writes at the end of the message.

The message from Henderson-James was forwarded to me by various sources who obtained it from the Google listserv "Townhouse." According to Salon.com, Townhouse is an invitation-only discussion forum run by Matt Stoller, senior policy advisor to progressive hero Rep. Alan Grayson (D-Fla.).

My sources advise me that the hundreds of high-level Democratic operatives, liberal activists, and journalists who subscribe to the listserv are furious that the Henderson-James email was leaked to a conservative media outlet. Listserv members are said to be angrily accusing each other of being the leakers.

This breach of security could be the end for Townhouse, one of the members reportedly said.

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About the Author

Matthew Vadum is an award-winning investigative journalist at a conservative watchdog group in Washington, D.C. Vadum is also author of Subversion Inc: How Obama's ACORN Red Shirts are Still Terrorizing and Ripping Off American Taxpayers.