ACORN Funded Political, For-Profit Efforts, Data Show
Actions Were Before Leadership Change

By Carol D. Leonnig
Washington Post Staff Writer
Friday, September 25, 2009

Documents released by a Senate Republican on Thursday show that leaders of the ACORN community organizing network transferred several million dollars in charitable and government money meant for the poor to arms of the group that have political and sometimes profit-making missions.

ACORN's tax-exempt groups and allied organizations, long a target of conservative ire, used more than half their charitable and public money in 2006 to pay other ACORN affiliates, according to an analysis by the tax staff of Sen. Charles E. Grassley (R-Iowa).

On Thursday, Grassley called the transactions a "big shell game" and said ACORN donors may be surprised by how the liberal group known for helping the poor obtain housing and health care was spending their money. He urged the Internal Revenue Service to take a closer look.

According to the Grassley report, charities "are being used to raise monies which are then funneled to other charities or to other organizations for purposes other than what the donor may have intended. . . . Dollars raised for charitable [purposes] appear to be used for impermissible lobbing and political activity."

ACORN officials, recently embarrassed by a video sting that showed counselors providing assistance to people posing as a pimp and a prostitute, said Grassley's accusations are based on financial transactions that occurred before a leadership shakeup last year. Bertha Lewis took over after co-founder and longtime director Wade Rathke was pushed to resign over his role in concealing from the full board his brother's embezzlement of ACORN money. Lewis said she has shut down dozens of affiliates.

"Senator Grassley made up his mind, and he didn't bother about the facts," Lewis said in an interview. "He's dealing with a lot of outdated information and decided to frame it with a predetermined conclusion. Yes, we had problems under Wade Rathke. . . . And we have been overhauling how we do things ever since."

Also on Thursday, Grassley requested that ACORN, which stands for the Association of Community Organizations for Reform Now, be taken off a list of approved charities for federal employees to donate to in an annual giving campaign.

The senator's staff members began looking into the organization's tax status in late 2006 as part of his interest in more oversight of charitable groups. They finished much of their analysis in fall 2008, and it is based largely on 2006 financial transactions. The most recent data available cover transactions in 2007.

Project Vote, one of the most recognized organizations in the ACORN family, took in $8.6 million in 2006 but paid more than 60 percent of that -- $5.4 million -- to two groups then controlled by Rathke. About $4.6 million went to ACORN for "contractual and campaign services" and $779,000 went to Citizens Consulting Inc., which charged ACORN affiliates on a percentage basis for bookkeeping services.

Lewis said the organization lacked transparency under Rathke's leadership, and the board has been working to open up its operations and make sure that money transfers between its groups are well documented.

"What you will see since I took over is a complete overhaul of how everything is coded . . . to make sure that if monies are meant for one thing, they are documented and used for that purpose," she said.

Research editor Alice Crites contributed to this report.

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