How do you crack open an ACORN? (Part 2)

Today we dig a little deeper into the Congressional investigation of ACORN. In Section 2 of the Executive Summary we are provided with a detailed list of the findings against ACORN, its management and directors, and its affiliates. Here is a brief description of each finding listed:

1. Piercing ACORN’s company veil in order to determine which individuals own or control the organization is a necessary step for preventing waste, fraud and abuse of federal funds in the hands of corporate control.

2. When ACORN commits bad acts, the individuals who are harmed are the low to moderate workers whom ACORN was founded to protect.

3. Dale Rathke’s embezzlement and ACORN’s cover-up are violations of ACORN’s corporate duties and constitute fraud. The identities and roles of those involved must be disclosed. Dale Rathke is the brother of ACORN founder Wade Rathke. In 1999 and 2000 he embezzled almost $1 Million that is reported as a loan on the books of Citizens Consulting Inc. (CCI), an ACORN affiliate that provides bookkeeping, accounting, and financial management services to ACORN and many of its affiliates. ACORN did not even notify its own board of the "loan" and treated it as an internal matter. ACORN fired two of its board members for investigating the embezzlement.

4. ACORN failed to observe its corporate articles by loaning money without proper legal documentation, by ignoring its duties under the corporate bylaws, by misusing corporate funds, and by terminating its members without honoring the process setup in its Articles of Corporation. ACORN has not complied with IRS filing requirements or ERISA.

5. ACORN’s inadequate corporate structure nurtured a breakdown of corporate integrity, encouraged improper political walls, fostered violations of the tax code, cultivated the illegal use of federal funds and supported an inadequate response to corporate embezzlement. ACORN accepts federal grant funds yet lacks any whistleblower policy, fails to comply with IRS laws and lacks an ongoing relationship with duly qualified legal counsel.

6. Project Vote lacks hiring standards and routinely employs convicted felons. ACORN is responsible for Project Vote’s fraudulent registrations because ACORN authorizes the selection of members engaged in voter registration.

7. Lobbying is a substantial part of what ACORN does. It has endorsed Senator Sherrod Brown (D-OH), Representative Albert Wynn (D-MD), and Representative Donna Edwards (D-MD). ACORN keeps donor records from the Clinton, Kerry and Obama campaigns with the intent to engage in prohibited communications. ACORN receives federal funding yet engages in improper lobbying. ACORN and its non-profit affiliates do not have separate accounts. Neither ACORN nor any of its affiliates have properly reported their political activities to the IRS.

Part of the problem investigating ACORN is the fact that it has a large network of hundreds of affiliates and offices in 41 states. During the 2008 election, ACORN registered 1.3 Million people to vote. One-third of those voter registrations were invalid. ACORN has been investigated for voter registration fraud in Nevada, Connecticut, Missouri, Ohio and North Carolina.

According to John Fund of The Wall Street Journal, ACORN has direct ties to the Obama campaign. Citizens Consulting Inc. (CCI) was paid $832,000 by the Obama campaign for get out the vote activities. Non-profits participating in partisan political activity are barred from receiving federal funds.

As we pointed out last week, not only has ACORN received over $53 Million dollars since 1994, during the Clinton Administration, but also is earmarked to receive $8.5 Billion more as part of the passed stimulus package. Two months into his current term President Obama partnered ACORN with the US Census Bureau to assist in recruiting 1.4 million workers to do the door-to-door census taking. That was recently rescinded by the Census Bureau because of the recent videos exposing continued criminal activity going on at ACORN.

In a March 19,2009 hearing, House Judiciary Committee Chairman John Conyers (D-MI) called for an investigation of ACORN but backed off three months later because "the powers that be decided against it." Rep. Michele Bachman (R-MN) inserted a provision into the proposed Mortgage Reform and Anti-Predatory Lending Act that blocked any organization involved in voter registration fraud from receiving any housing counseling or legal assistance grants. It was unanimously passed by a voice vote in the House. However, Barney Frank (D-MA), Chairman of the Financial Services Committee, claimed he made a mistake and planned to take out the "anti-ACORN Provision" from the Act.

"I did not read it carefully, and it was in the last minute that the amendment was accepted," Frank said. "It is a deeply flawed amendment and I am opposed to it. Banning people from possible participation in government programs based on an indictment is a violation of the basic principles of due process." Frank plans to offer another amendment to the bill on the House floor that would allow non-profits that have been indicted to receive grants under the legislation so long as they have not been convicted. Bachmann said Frank’s amendment would "eviscerate the meaning" of her original amendment.

Proof again that the reading of a bill in Congress prior to a vote is a rarity. To top that, Frank is arrogant enough to undo a vote of record, even after he admitted he didn’t read it. And they wonder why the American public doesn’t trust any of our representatives or senators.

The investigation then spends several pages laying out the multi-faceted web of corporate, and non-profit entities tied together under the ACORN umbrella and using the multiple violations and inadequacies to penetrate the corporate veil into who the people who are in control of this massive political and criminal enterprise. There are a couple of pages of documentable proof of Wade Rathke’s intentional obstructive maneuvers that involved attorney’s from SEIU Local 100. Guess who the administrator of the Local 100 is, Wade Rathke.

Rathke was subsequently fired from head of ACORN but continues to be involved in its operation, which is a federal crime. Six of the ten board members who were involved in covering up the embezzlement are still either working for ACORN or an ACORN affiliate. So, the tumor was removed but the cancer remains.

There are a couple more pages spelling out that Dale Rathke, by ACORNs failure to report the Embezzlement, is guilty of tax fraud and tax evasion. He owes a minimum of 25% tax on the money, plus interest and penalties up to 200% if ordered to pay restitution. ACORN then violated ERISA laws by taking money from the employee benefit plan to recover the embezzled funds. The money was "gifted" to ACORN instead of loaned. This violates another set of laws because much of that money was given by donors without instructions to give the money to ACORN.

In August of 2008 at a Regional ACORN meeting the full extent of not only Dale Rathke’s embezzlement, but also smaller cases of embezzlement throughout the organization were revealed. Dale agreed to pay the money back to the Employee Benefit Fund at a rate of $30K/yr to avoid prosecution. It was also recommended that Dale stay with the company. That was until it was revealed that the Advisory Board had not been notified and so subsequently both Wade and Dale were voted out.

The "NEW ACORN" subsequently borrowed the money to pay back the debt owed by Dale Rathke because the health fund was short of money. However, the manner in which they did so was done illegally. It seems to me that even when they have good intentions they cannot do things according to law and continue to create a mess of legal and fiscal problems for the organization. I am not even half way through reading this 88 page Investigation into ACORN. Stay tuned for more "nuggets" as we continue to dig through the nut pile.