Fraud, Embezzlement, and Cover-Ups: A Brief History of ACORN

In the wake of a series of embarrassing hidden-camera exposes and mounting congressional pressure to cut off its federal funding, Bertha Lewis, CEO of the Association of Community Organizations for Reform Now announced that ACORN will seek independent review. However, the ACORN review which followed the million dollar Rathke embezzlement was merely a smokescreen; eight former ACORN board members previously sought a complete forensic examination of ACORN and its related entities followed by an independent audit from a Big Four accounting firm.

Lewis noted that ACORN’s advisory council would assist her in choosing an outside auditor, former Massachusetts Attorney General Scott Harshbarger. The ACORN advisory council includes John Podesta, head of the Center for American Progress, a liberal think tank; Andrew Stern, president of the Service Employees International Union; and former Maryland Lt. Gov. Kathleen Kennedy Townsend.

“As a result of the indefensible action of a handful of our employees,” Lewis said in a statement, “I am, in consultation with ACORN’s Executive Committee, immediately ordering a halt to any new intakes into ACORN’s service programs until completion of an independent review.” Mind you, these are the same senior staff and executive committee members who concealed and covered up a million dollar embezzlement, but who themselves were never terminated.

Besides, ACORN already had its chance to do the right thing following the Rathke embezzlement when the board of directors appointed an interim management committee to investigate this fraud and reorganize ACORN. So what happened the last time that ACORN claimed to put in place its own internal management committee?

Last year, the national board of directors installed an Interim Management Committee (IMC) following a million dollar embezzlement by Dale Rathke and subsequent cover up by the ACORN executive committee, senior staff and co-founder Wade Rathke. The national board appointed Karen Inman (Legal Affairs), Carol Hemmingway (Financial Affairs) and Marcel Reid (Governance) to the IMC.

The national board authorized the IMC to hire independent professionals to investigate and reorganize ACORN following the million dollar Rathke embezzlement. While the ACORN board of directors took prompt corrective action after learning about the misappropriations, the IMC desired to take even more definitive remedial actions, including a complete accounting of all ACORN assets, a forensic examination of the known embezzlement and an independent audit of ACORN and it related entities.

These were all professionally prudent recommendations under the circumstances; unfortunately, 38 of 50 board members were swayed by the executive committee and ACORN insiders into condoning the cover up and removing the IMC board members who attempted to exercise their fiduciary obligations. Nevertheless, eight courageous board members banded together and formed the ACORN 8, LLC to reform the once venerable organization.

The ACORN 8 were the first to identify the nebulous Citizen’s Consulting Inc. (CCI) and attempted to “follow the money” at ACORN; the first to seek a forensic examination and independent audit of ACORN and its related organizations; the first to seek injunctions against ACORN, the Rathkes and CCI; the first to call for a national boycott of all charitable donations, federal funding and member dues; and the first to file Civil Rights and RICO complaints against ACORN’s corrupt management. Consequently, Louisiana Attorney General James “Buddy” Caldwell issued subpoenas and is investigating ACORN and Rathke.

Lewis also said that ACORN would name an independent auditor and investigator to conduct a wide-ranging “top to bottom” review of the organization.

Really?!? We’ve heard that one before; the IMC objected to ACORN’s duplicitous assertion that an “independent auditor” would be engaged following the Rathke embezzlement. When ACORN senior staff hired Mesirow Financial Services (not a licensed CPA firm) to conduct a review of ACORN’s financial controls, ACORN insiders presented this review as an “independent audit” to the board. Don’t be fooled: a review is not a forensic examination or an independent audit.

Worse still, the senior staff and executive committee members who were implicated by the embezzlement and continuing fraud cannot be the same individuals who hire the “independent auditors” to investigate – it is an inherent conflict of interest. If ACORN hopes to survive then the know nothing, see nothing, do nothing board of directors must by replaced by individuals with the strength, courage and capabilities to fulfill their fiduciary obligations. ACORN needs a qualified audit committee to formally engage truly independent outside auditors.

“ACORN has a long history of serving those who most need help, and giving voice to those who have been left behind.” Townsend said in a statement. “We will take the necessary steps to ensure that ACORN functions with the highest levels of ethical standards and competence.” But how is that possible when ACORN won’t terminate ACORN senior staff and executive board members who concealed a million dollar embezzlement and then ousted the board members who attempted to investigate the fraud?