Political Hay

Community-Organized Crime

The Issa report sheds light on ACORN's damning conduct.

By 7.24.09

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The election fraud factory known as ACORN should be stripped of its jealously guarded tax-exempt status because it illegally spends taxpayer dollars on partisan activities, commits "systemic fraud," and violates racketeering and election laws, according to a congressional report unveiled yesterday.

Republican investigators on the House Oversight and Government Reform Committee found that by "intentionally blurring the legal distinctions between 361 tax-exempt and non-exempt entities, ACORN diverts taxpayer and tax-exempt monies into partisan political activities."

"Operationally, ACORN is a shell game played in 120 cities, 43 states and the District of Columbia through a complex structure designed to conceal illegal activities, to use taxpayer and tax-exempt dollars for partisan political purposes, and to distract investigators," the report says. Structurally, it is "a chess game in which senior management is shielded from accountability by multiple layers of volunteers and compensated employees who serve as pawns to take the fall for every bad act."

The report examines the ACORN network's abusive interlocking directorates, and claims that the group deliberately organized itself to escape legal and public scrutiny. "ACORN hides behind a paper wall of nonprofit corporate protections to conceal a criminal conspiracy on the part of its directors, to launder federal money in order to pursue a partisan political agenda and to manipulate the American electorate."

There is "a pattern of loose financial accounting and no firewalls" within the community-based group's byzantine network of hundreds of affiliated groups, Rep. Darrell Issa (R-California) told TV talk show host Glenn Beck yesterday.

"It's very clear that that's for a reason," said Issa, ranking member on the committee. It is impossible to hand over government money "to ACORN and its affiliates without knowingly delivering it to partisan operatives who in fact engage in campaigning."

The report was "specifically done so that the facts speak for themselves so that very clearly we could make the case that ACORN cannot be receiving government money and should lose its tax-free status," the congressman said.

The unprecedented, damning new 88-page report --"Is ACORN Intentionally Structured As a Criminal Enterprise?" (PDF available here) -- declares that "[t]he weight of evidence against ACORN and its affiliates is astounding."

ACORN needs to be investigated criminally in order "to bring to justice the responsible parties who have heretofore been shielded from prosecution by ACORN's obscure organizational structure; to protect the American system of democratic self-government from manipulation and disruption; and to free our political climate from the choke of corruption that threatens to strangle free and fair elections."

It accuses the Association of Community Organizations for Reform Now of carrying out "a nation-wide strategy of tax fraud, racketeering, money-laundering and manipulating the American electorate." Specifically, the report accuses ACORN of racketeering, evading taxes, sloppy accounting, defrauding donors, defrauding the U.S. government, filing false statements, obstructing justice, and plundering employee pension funds.

The report singles out for special criticism the group's handling of a nearly $1 million embezzlement around 2000 by Dale Rathke, then a senior ACORN employee who is the brother of ACORN founder Wade Rathke. The misappropriation was covered up by management, including Wade Rathke, for eight years until it was revealed to the group's national board last summer.

The report notes that failing to report the misappropriation to the IRS in itself constitutes fraud, and that ACORN apparently raided pension funds to help cover the financial shortfall. ACORN also agreed last year to accept a bailout consisting of a $1 million loan and $500,000 in donations from Forest City Ratner, a developer that wants to build an ambitious project in Brooklyn, New York, to be called Atlantic Yards that would become, among things, the new home of the New Jersey Nets. The developer indicated in a letter to ACORN that it would disburse $500,000 in grants but the money wouldn't go to ACORN directly. The grants were to be made to the ACORN Institute, one of ACORN's tax-exempt nonprofit affiliates.

There are strings attached. ACORN previously signed an agreement to support the project in exchange for a commitment that the developer would build affordable housing, but the 2008 agreement with the developer provides that the ACORN Institute was to receive $300,000 of the $500,000 grant up front, with the remaining $200,000 to be paid out in equal installments in August 2009 and August 2010. With the current economy, it's unclear if the housing will be built, and whether the money paid out will stay at the ACORN Institute, which trains aspiring community organizers, is anyone's guess because ACORN routinely shuffles cash around its network.

The report also notes that Service Employees International Union (SEIU), two of whose locals are ACORN affiliates, was involved in discussions with now impeached Illinois Gov. Rod Blagojevich over whom he planned to appoint to Barack Obama's Senate vacancy in that state.

The report also points out that Wade Rathke, who was supposed to sever all ties with ACORN, hasn't. To the contrary, he remains deeply involved with at least three of ACORN's affiliated nonprofits.

He recently changed the name of ACORN's international consultancy, ACORN International, to Community Organizations International. Rathke also remains chief organizer, or CEO, of the New Orleans-based Local 100 of SEIU, another ACORN affiliate he founded. He does not appear to have stepped down as president and director of Affiliated Media Foundation Movement (AM/FM), an ACORN affiliate that produces news segments for eight alternative radio stations.

Rathke has long drawn inspiration from Saul Alinsky's legendary political strategy book, Rules for Radicals, but he only believes in rules if they benefit him. To this day he continues to defy the resolution approved on a vote of 29 to 14 by ACORN's national board on June 20, 2008. It declared that Rathke "be terminated from all employment with ACORN and its affiliated organizations or corporations" and that he "be removed from all boards & any leadership roles with ACORN or its affiliated organizations or corporations."

As detailed and damning as Congressman Issa's report may be, it faces an uphill battle in Congress. A push to hold congressional hearings on ACORN looked like it had momentum earlier this year until it abruptly stalled.

Although Democrats in Congress generally receive complaints about ACORN with a collective yawn, House Judiciary Committee John Conyers (D-Michigan), a longtime ACORN ally, shocked some on the left in March when he expressed interest in investigating the group. Conyers had considered evidence based on court testimony from former ACORN employee Anita MonCrief about ACORN's alleged serial violations of tax, campaign finance, and possibly illegal coordination with President Obama's election campaign.

At the time, Conyers said the allegations were "a pretty serious matter," but later he backed off, shrugging that "the powers that be decided against it."

The Issa report came a day after the American Civil Liberties Union of Pennsylvania and ACORN's Project Vote affiliate filed a federal lawsuit aimed at undermining the Keystone State's law aimed at combating election fraud.

To briefly digress, this isn't the first time that ACORN has tried to change laws instead of obeying them. In 1995 the group sued California to win an exemption from the law that required it to pay its own employees a minimum wage. ACORN lost after arguing that paying its employees more would reduce their activist zeal for the poor.

Now in Pittsburgh, former ACORN canvassers are facing convictions for voter registration fraud in Pittsburgh. ACORN cries political persecution while the ACLU claims the law has been misapplied by Allegheny County's Democratic District Attorney Stephen Zappala Jr., who filed charges against seven canvassers for falsifying voter registration forms. After preliminary hearings, all seven have been ordered to stand trial.

Witold Walczak of the ACLU said, "They already charged the employees, and they've hinted they might go after ACORN next."

In fact in May Nevada's Democratic attorney general and secretary of state unveiled voter registration fraud charges against ACORN and two of its senior executives. It was a historic moment because ACORN had long bragged about its ability to duck election fraud charges.

In Nevada ACORN has been accused of offering a bonus program called "Blackjack" or "21+" that paid a $5 bonus to each canvasser who brought in 21 or more completed voter registration forms each shift. Such schemes are banned in Nevada because they give canvassers an incentive to file fraudulent forms.

ACORN is also under investigation in Cuyahoga County, Ohio. The Democratic local prosecutor there is probing ACORN after a man registered to vote multiple times by the group was indicted by a grand jury for fraudulent voting.

Meanwhile, Rep. Steve King (R-Iowa) tried yet again to block ACORN from receiving taxpayer funds. On Thursday he offered an amendment to a spending bill that would have prohibited any taxpayer money in the bill from going to ACORN.

According to a King press release, "Liberals on the House Rules Committee ruled King's amendment out of order." This is the seventh amendment that lawmakers sympathetic to ACORN have blocked King from offering.

"John Conyers is right: the 'powers that be' in this Congress will do all they can to protect ACORN," King said.

And despite its mounting legal problems, the unceasingly controversial organization remains eligible for $8.5 billion in federal funds this year.

According to CNSNews, ACORN might also be eligible for government funding as a result of language in the Democrats' healthcare bill that would give federal money to groups that are members of a "national network of community based organizations." When asked, both Sens. Christopher Dodd (D-Connecticut) and Orrin Hatch (R-Utah) said they couldn't say for sure if ACORN could receive tax dollars under the legislation.

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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.