The $1 Million Embezzlement at ACORN

Capital Research Center ^ | October 17, 2008 | Robert Huberty

[vadum]

Prominent voices on the left are divided over how to address the unfolding scandal at ACORN, the nationwide community organizing, housing and voter registration group.

This scandal is not the one that concerns fraudulent voter registrations by ACORN workers. And it’s not the scandal concerning the Bush Administration’s agreement to allow taxpayer money for the Fannie/Mae Freddie Mac bailout to go to ACORN housing nonprofits. This is the scandal concerning the embezzlement of almost $1 million by ACORN’s financial officer, the cover-up engineered by his brother, who is ACORN’s founder and longtime leader, and the reaction of ACORN’s supporters in the community of community organizers.

ACORN is suffering from the fall-out created by the discovery that Wade Rathke, its founder and long-time leader (1970-2008), failed to notify police when he discovered in 2000 that his brother Dale, ACORN’s chief financial officer, had embezzled $948,000 from the group. Instead, Wade Rathke allowed his brother to leave the payroll of Citizens Consulting, the ACORN affiliate that handles its financial affairs, and go to work as his $38,000 a year “assistant” at ACORN headquarters. Prior to making this decision Rathke discussed the embezzlement with some of the organizers who comprise ACORN’s senior management, but he did not inform ACORN's 51-member board of trustees.

The Rathke family signed a restitution agreement in which they promised to repay the amount stolen at the rate of $30,000 per year. They have repaid $270,000. In return ACORN promised to keep quiet about what was called a “misappropriation.” Dale Rathke remained an ACORN employee until May 2008 when a whistleblower caused the uproar that led to his firing and his brother’s resignation.

ACORN is organized to discourage easy scrutiny. Dissidents note that although Wade Rathke resigned from ACORN, he retains his position as “chief organizer” at ACORN International LLC, a private company with overseas offices. ACORN’s local chapters are not independent nonprofits, but some ACORN housing corporations are tax-exempt 501(c)(3) public charities, which allows them to get federal grants, and other ACORN-related groups are 501(c)(4) advocacy groups. ACORN itself is incorporated as a nonprofit, but not a 501(c)(3), hence not subject to IRS oversight.

After interviewing over a dozen insiders, veteran philanthropy watcher Pablo Eisenberg writes in the Chronicle of Philanthropy (October 2) [subscription required] that the scandal illustrates what he considers failings characteristic of nonprofits. For instance, Wade Rathke was a charismatic leader who set the ACORN agenda. He made sure that ACORN headquarters controlled the actions of its network of 103 affiliates in 38 states, which did not have independent charity status. He also made sure that ACORN’s board and senior staff always dealt with him and not with each other. Eisenberg is a former director of the Center for Community Change, one of the first community organizing groups, so the absence of democratic decision-making at ACORN must be particularly discomforting to him.

Eisenberg reports that Rathke’s close friend Drummond Pike has given ACORN $738,000 to pay off the restitution money still owed by Rathke. Pike is president of the Tides Foundation in San Francisco. Wade Rathke used to be listed as a member of the Tides board of trustees but his name no longer appears on its website.

On his blog, Drummond Pike recounts the phone interview he had with Eisenberg. Pike was disappointed that Eisenberg kept asking him questions about how to reform ACORN’s management and organization, making it more transparent and accountable. Pike noted that ACORN is not a tax-exempt charity and so doesn’t have to follow IRS rules. He writes:

“ACORN is about building power. Power comes from scale, strategy, and accountability. If 38 different state ACORN’s hired their own organizers, how in the world would one develop accountability? How could you hold to a national strategic plan on issues if you had to convince 38 different boards and the staffs they had hired to participate? And then, as every funder knows, the fights over resources would be legion.

To turn the question on its head, why can’t an organization of low income people achieve scale, have an effective national office that holds all threads accountable, and drive a single strategic agenda? Why can’t an ACORN have a Chief Organizer with significant authority to manage the near 1000 person staff working for the members?”

As for Rathke’s cover-up, Pike thinks he did the right thing.

“Wade did nothing wrong. When faced with a choice between public prosecution and likely bankruptcy or the private restitution deal, ACORN’s leadership chose the latter. Did Wade support this to simply protect his brother? I argue no. If the survival of the organization was not also at stake, I do not believe they would have decided what they did.”

(This entry can no longer be found on Pike’s blog, “Notes from the Left Coast,” but it is contained in the Aug. 19, 2008 entry for Rathke’s blog, “Chief Organizer.”)

Rick Cohen, former head of the leftist National Committee for Responsible Philanthropy, laments the turn of events at ACORN on his blog, “The Cohen Report,” (July 25). But what is most remarkable are the 37 comments from former ACORN organizers and others familiar with the group that the blog provoked.

The commenters agree that Wade Rathke has “founder’s syndrome,” a condition that combines dynamic leadership, blindness and obstinacy. In other words, he’s a control freak, and a corrupt one to boot. Some suggest that ACORN was ripe for embezzlement, noting the complex maze of its affiliates—all located at 1024 Elysian Fields Ave. in New Orleans, which is also the address for SEIU Local 100, where Rathke continues to hold the title “Chief Organizer.”

Cohen, like Eisenberg, makes a point of calling for greater ACORN board oversight to provide transparency and accountability. His correspondents credit his good intentions but many seemed to consider him hopelessly naive about the way things really work at ACORN.

It's reported today that several ACORN board members are suing the organization to gain access to its records, but other board members continue to defend Rathke, claiming he did nothing wrong.

[ncfool]

ACORN = MONEY LAUNDERING FOR THE DEMOCRATS........ Who is Vera Baker? Does she have ties to Tony Rezko?

There are questions to be asked and answered. Why did her web site disappear Sunday when the posters of Free republic outted her web site and the possibility of her being tied to a credit card money laundering factory for Obama in Martinique. Could this be tied to ACORN?

Was she Barack's love interest or just a Fundraiser bundler of soft money? Did this money go to ACORN? She has ties and history raising funds for Barack and for the Congressional Black Caucus.

Why did the DNC allow the campaign to move from DNC HQ in DC to Chicago where David Axlerod and his minions could hide and control the dirty games that possibly have taken place with illegal contributions for across the world like the $35,000 from the Edwan Brothers in Ga. No that’s not Georgia but Gaza Strip in the Middle East. But we all know that Barack is a friend of Israel and that the Brother’s got carried away in the moment of donating $35,000 to Obama.

I hope that somebody has the sense to check bank accounts, credit card records and transaction prior to the election find our where all the ACORN funds came from as this really reeks of money laundering. The FEC and FBI and Secret Service along with other Government agencies need to make this a top issue before the election.

Did some of this Laundered money go to ACORN. Can an audit of ACORN'S sources of funds be tracked to domestic and foreign bank accounts? We already know that Obama’s Campaign gave acorn more then $800,000 for voter registration. Wanna bet its bigger dollars (millions) from offshore accounts?





So yes this is a smoking gun! Does it involve Rezko ,Axlerod and Obama I bet it does. Does the Main Street Media pick it up! Probably not as we are just bloggers and speculators of what occurred and don’t have any power to do much about it unless we spread the word to our friends and fellow bloggers on the net. Please make your voices heard on the net.

[greyfoxx39]

Bump in the vain hope that the slime will stick.

[TexasCajun]

Listen to ACORN explain:

ACORN Board Members Demand Accounting After Embezzlement

Check out the video of the brothers involved.

[TexasCajun]

Although Dale Rathke stole the money more than eight years ago, his brother never revealed the theft to the board, instead setting up a schedule by which his brother could return the funds without a mess. Board members found out about the theft this year after a prominent ACORN donor questioned whether its donations had been misused, and many were furious that Wade Rathke family had kept them in the dark.

[GodGunsGuts]

...

[browniexyz]

GO Capital Research Center!!! Keep up the great work!!

[hoosiermama]

Thanks for the Info...

Did you happen to see the ACORN leader in Washington State. His comment was they had a bunch of “Morons” working for them......If I was/had been an ACORN employee, I'd be really pis... OTOH they have a bunch of...

[boxlunch]

bump

[Terry Mross]

Started in Arkansas by F.O.B. They operate on tax dollars paying people to register to vote.

Wonder how you’d go about forming a “Get Out The Vote for Minorities” organization. You could get rich quick.

[razorback-bert]

Drummond Pike has given ACORN $738,000 to pay off the restitution money

Hmmm, was that money a gift, requiring gift tax payment or a donation yielding a tax deduction?

[Grampa Dave]

Senator Obama, if you keep hiding your Acorn friends into your toilets, your toilets will continue to back up.