For ACORN, Video Is Only Latest Crisis

By Carol D. Leonnig and Alexi Mostrous
Washington Post Staff Writers
Sunday, September 20, 2009

The liberal political organizing group ACORN faced internal chaos and allegations of financial mismanagement and fraud long before two young conservatives embarrassed the group with undercover videos made at field offices in Washington and across the country.

Internal ACORN documents show an organization in turmoil as last year's presidential election approached, with a board torn over how to handle embezzlement by the founder's brother and growing concern that donor money and pension funds had been plundered in the insider scheme.

Minutes from a meeting ACORN held in Los Angeles last summer reveal a group then on the brink of financial collapse. "Currently owe over $800k to IRS," the minutes note. "Haven't paid medical bills of over $300k. We are essentially 'broke' nationally and lots of offices are struggling."

Some top ACORN officials tried to shield the scheme, which involved Dale Rathke, the brother of ACORN founder Wade Rathke. "Leadership has no faith in staff. Wade betrayed them," the minutes said.

The documents present a troubling picture of one of the nation's leading social justice advocacy groups, with more than 400,000 members, offices in 75 cities and an expanding international presence.

ACORN, or Association of Community Organizations for Reform Now, was founded in 1970 and is supported in part by government grants. It has forged relationships with banks, federal and state agencies, and nonprofit groups that have made it a major force in helping low-income families buy homes and in bringing marginalized voters to the polls. The ACORN political action committee endorsed Barack Obama in February 2008.

ACORN said in a statement Saturday that it has taken "decisive action" to correct problems detailed in the documents, which it said were stolen and leaked to investigators for a House oversight committee. Spokesman Brian Kettenring said ACORN has reorganized, severed its connections to Wade Rathke and "been made whole relative to the monies stolen in 1999-2000." He also said that "arrangements have been or are being made to correct all tax delinquencies."

An investigation by Republican members of the House Committee on Oversight and Government Reform also showed that there was concern within ACORN that its voter outreach efforts, which are required to be nonpartisan, were aimed at electing Democratic candidates, a key complaint of conservative critics.

In a June 2008 report to ACORN, Washington lawyer Elizabeth Kingsley, who conducted an independent review of the group's finances, expressed concern that inadequate documentation of money transfers between ACORN and an allied organization, Project Vote, would make it difficult for either group to respond effectively to questions about whether tax-deductible charitable contributions were used for political purposes. She also noted conflicts created when decision-makers at the tax-exempt entity had roles in political activities carried out by other groups.

"My question all along was, are we funding a liberal political agenda with taxpayer dollars without knowing it?" said Rep. Darrell Issa (R-Calif.), who co-sponsored last week's House legislation cutting off ACORN's federal funding and led the oversight committee investigation, whose findings were released in July. "By the end, it was clear to me, this organization can't assure anybody, including itself, that it won't use our money for partisan politics."

Conservative ire over ACORN has been building since the 2008 elections, for which the group mounted voter-registration drives that helped propel the victories of Obama and other Democratic candidates. The Obama campaign paid Citizens Services of New Orleans, a close ally of ACORN, more than $800,000 for get-out-the-vote activities, and the group's political action arm endorsed Obama.

Obama's ties to ACORN date to his days as a community organizer in Chicago. He represented ACORN in a lawsuit in 1994 and conducted two leadership training sessions for ACORN's Chicago chapter in the late 1990s. In 1992, Obama served as director of Project Vote in Chicago, helping to register 150,000 voters on the South Side.

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