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ACORN’s Tangled Money Tree

Getting out the vote has never been such a racket.

By 10.31.08

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When Sir Walter Scott wrote in 1808, "Oh what a tangled web we weave, when first we practice to deceive," he wasn't writing about ACORN, but he might as well have been.

In 2008, the activities of the radical, corrupt left-wing Association of Community Organizations for Reform Now, which has tangled itself up in an infinitely complex web of deceit, thuggery, and questionable financial dealings, is long overdue for a RICO probe.

The Racketeer Influenced and Corrupt Organizations (RICO) Act, which was created to prosecute organized crime, allows the federal government to go after individuals who commit any two RICO-related crimes over a decade. The law allows courts to convict persons if it can be shown that they committed those crimes as part of an illegal enterprise and can order disgorgement of their ill-gotten gains from the enterprise.

The Ohio-based Buckeye Institute isn't waiting for the feds to act. It filed a civil action under a state racketeering law, arguing ACORN has engaged in a pattern of corrupt activity that amounts to organized crime. It seeks ACORN's dissolution as a legal entity, the revocation of any licenses it holds in Ohio, and an injunction against fraudulent voter registration and other illegal activities.

The Buckeye Institute said in a press release that the suit, filed on behalf of two voters, alleges that "ACORN's actions deprive them of the right to participate in an honest and effective elections process." The voters "allege fraudulent voter registrations submitted by ACORN dilute the votes of legally registered voters."

The suit also alleges that ACORN's voter-mobilization arm, Project Vote, "regularly advises Ohio Secretary of State Jennifer Brunner on election strategy, even recently issuing a news release that claims credit for Brunner's directive restricting challenges to suspected fraudulent voter registrations."

Brunner, a Democrat, has declined to enforce the provisions of the Help America Vote Act that requires her to use a database to allow the verification of 600,000-plus registrations from new Ohio voters. Brunner admits there are "discrepancies" on about 200,000 of the new registrations, but won't give local election officials the registration data they need to verify the validity of the registrations.

It's a recipe for disaster, but that's exactly the way her allies at ACORN like it.

That's because ACORN thrives on confusion. Its nebulous legal status and opaque corporate structure allow it to keep its activities largely hidden from public view.

The social justice entrepreneurs of ACORN sit on the boards of ACORN and of ACORN affiliates.

These "interlocking directorates" create an appearance of conflict of interest. Such arrangements may be widespread and lawful, but they always raise legitimate questions about the quality and independence of board decision-making. The ACORN network claims to be a "family" of organizations embodying the ethos of community organizing, which stresses local action and decentralized authority.

In fact, ACORN is tightly controlled from the top. One intrepid blogger discovered that 294 ACORN affiliates operate out of ACORN's building on Elysian Fields Avenue in New Orleans.

ACORN's many affiliates have extraordinarily sophisticated financial arrangements that are largely hidden from public view. ACORN uses its system of interlocking boards of directors to oversee its affiliates and make financial mischief.

As Jim Terry of the Consumers Rights League has noted, "ACORN has a long and sordid history of employing convoluted Enron-style accounting to illegally use taxpayer funds for their own political gain."

Look at a person named Donna Pharr. Pharr sits on the boards of at least 22 ACORN affiliates. She's also deputy treasurer of the Minnesota ACORN Political Action Committee and is listed by Michigan as the contact person for Communities Voting Together, a "527" pressure group.

And even now after it was revealed earlier this year that ACORN founder Wade Rathke covered up his brother's nearly $1 million embezzlement, Rathke remains chief organizer of ACORN affiliate SEIU Local 100, president of ACORN International Inc., and president and a director of ACORN affiliate Affiliated Media Foundation Movement Inc.

There are plenty of other examples of directors and officers playing musical chairs throughout the ACORN empire. (See Foundation Watch, November 2008.)

Commenting on ACORN's complex administrative arrangements, Charlotte Allen observes in the Weekly Standard, "The potential for abuse in an interlocking arrangement governed top-down from New Orleans is as obvious as a thicket of 'Change' signs at an Obama rally."

ACORN takes recycling seriously, at least when it comes to money.

My research determined that ACORN affiliate Project Vote paid ACORN $10,861,825 from 2000 through 2006. Project Vote also paid ACORN affiliate Citizens Services Inc. $1,206,942 in 2005 and 2006, and paid $1,266,967 to ACORN affiliate Citizens Consulting Inc. from 2000 through 2004.

Since 2000 the American Institute for Social Justice, Inc. paid ACORN $1,926,831, Citizens Consulting, Inc. $362,464, and ACORN Associates, Inc. $258,593.

On its 2002 tax form, the Institute disclosed a $1,684,184 "community reinvestment" grant to ACORN, along with a $9,637 loan to SEIU Local 100. (On the same document, the Institute also reported receiving a $50,000 interest-free loan from the Tides Foundation for "purchase of equipment," and a $4,000 interest-free loan from Open Society Institute's Progressive America Fund Inc.) In an LM-2 (labor union disclosure) form last year, SEIU Local 880 revealed that it gave $60,118 to ACORN for "membership services."

On its 2006 tax form, the American Institute for Social Justice, Inc. disclosed that it provided a $4,952,288 "community reinvestment" grant to ACORN, the non-tax-exempt Arkansas nonprofit corporation that controls the ACORN network.

ACORN lawyer Elizabeth Kingsley raised the alarm about interlocking directorates and the perilously close ties between ACORN and Project Vote. As reported in the Oct. 22, 2008 New York Times story, Kingsley found:

[T]he tight relationship between Project Vote and Acorn made it impossible to document that Project Vote's money had been used in a strictly nonpartisan manner. Until the embezzlement scandal broke last summer, Project Vote's board was made up entirely of Acorn staff members and Acorn members.

Ms. Kingsley's report raised concerns not only about a lack of documentation to demonstrate that no charitable money was used for political activities but also about which organization controlled strategic decisions.

She wrote that the same people appeared to be deciding which regions to focus on for increased voter engagement for Acorn and Project Vote. Zach Pollett, for instance, was Project Vote's executive director and Acorn's political director, until July, when he relinquished the former title. Mr. Pollett continues to work as a consultant for Project Vote through another Acorn affiliate.

"As a result, we may not be able to prove that 501(c)3 resources are not being directed to specific regions based on impermissible partisan considerations," Ms. Kingsley said, referring to the section of the tax code concerning rules for charities.

She also found problems with governance of Acorn affiliates. "Board meetings are not held, or if they are, minutes are not kept, or if minutes are kept, they never make it into the files," she wrote.

Project Vote, for example, had only one independent director since it received a federal tax exemption in 1994, and he was on the board for less than two years, its tax forms show. Since then, the board has consisted of Acorn staff members and two Acorn members who pay monthly dues.

The newspaper also interviewed George Hampton and Cleo Mata, two former Project Vote board members. Both denied serving on the board and Hampton, who acknowledged he had been an ACORN member, said he had never heard of Project Vote.

Ironically, Rathke condemned interlocking directorates in the corporate world. In 1980, he endorsed the proposed "Corporate Democracy Act" which would have fined directors up to $10,000 per day for "serving more than two corporations" simultaneously. (Heritage Foundation backgrounder, March 11, 1980)

Go figure.

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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.