(Here is video of ACORN CEO Bertha Lewis appearing on Fox News Sunday recently, where she was questioned by Chris Wallace. GOP Rep. Darrell Issa also appeared on the show.)
Senator Decries ACORN 'Shell Game' With Its Finances
Documents released by a Senate Republican on Thursday show that leaders of the community organizing group ACORN transferred millions of dollars in charitable and government funds meant for the poor to other arms of ACORN with political and sometimes profit-making missions.
ACORN's community organizing groups, now in trouble after some embarrassing undercover videos were taken in their offices, used more than half of their charitable and public funds in 2006 to pay other ACORN affiliates, according to an analysis by the tax staff of Sen. Charles E. Grassley (R-Ia).
On Thursday, Grassley called it a "big shell game" and said ACORN donors might be surprised at how the liberal group known for helping the poor get housing and health care was spending their money. He urged the Internal Revenue Service to take a closer look.
"Similar to the use of charities by [convicted lobbyist] Jack Abramoff, 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," according to the Grassley report. "In general, the flow of money among the ACORN family of organizations is a big shell game. Dollars raised for charitable [purposes] appear to be used for impermissible lobbing and political activity."
ACORN officials said Grassley's accusations are based on old financial transactions that occurred before a leadership shakeup last year, in which Bertha Lewis took over from longtime director and founder Wade Rathke. Rathke was pushed to resign in June 2008 for his role in concealing from the full board his brother's embezzlement of ACORN funds. Lewis said she has shut down dozens of affiliates.
"Sen. 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 "He's dealing with a lot of outdated information and decided to frame it with a predetermined conclusion.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 be taken off the list of approved charities for federal employees to donate to in an annual giving campaign.
Grassley's staffers began looking into ACORN's tax status in late 2006 as part of the senator's interest in more oversight of charitable groups. They finished much of their analysis in fall 2008, which is based largely on 2006 financial transactions. The most recent data available cover transactions in 2007.
The analysis found a large amount of money moving out of ACORN's tax-exempt charities and into other affiliates. One of the best-recognized organizations in the ACORN family, Project Vote, took in $8.6 million in revenues in 2006, but paid more than 60 percent of that, or $5.4 million, to two groups then controlled by founder Wade Rathke. Roughly $4.6 million went to ACORN for "contractual and campaign services" and another $779,000 went to Citizens Consultants Inc. (CCI), which charged ACORN affiliates on a percentage basis for bookkeeping services.
ACORN Housing received $6 million in revenues in the same year -- $1.7 million of that in government funds -- and paid $1.4 million of the total to other ACORN groups. That included payments to CCI and the People's Equipment Resource Center (PERC).
Rathke, in an interview, said there is nothing untoward about paying other affiliates for their services. He said CCI was paid for all the affiliated groups' shared auditing, bookkeeping and legal work. PERC was paid for the group's shared computer, technical and Internet needs.
Grassley's investigators said they found other elements of ACORN's many financial reports curious.
For example, in more than two dozen cases, executives and top directors who were listed as running specific tax-exempt ACORN organizations were not listed as being compensated by that group. Rathke was listed as the officer of three tax-exempt and 20 other ACORN organizations in the 2006 filings, but was not compensated by any of them. Dorothy Amadi and Donna Pharr, who were listed respectively as being the treasurer for 12 and 27 tax-exempt ACORN groups, were not paid for their services by the tax-exempt organization.
"The fact that entities with millions of dollars coming in aren't compensating any of their officers and directors raises the question of who is running the organizations and how are the charities accomplishing their charitable goals," Grassley said in a statement. " It also makes you wonder, if half the money coming into the charity is funneled up the chain to the for-profit parent organization, are the so-called charities just pawns in a shell game rather than actual charities? Establishing accountability here is very necessary given the public dollars at stake, through government support and tax-exempt status."
Lewis said the organization lacked transparency under Rathke's leadership, and the board has been working diligently to open up its operations and make sure 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.
Sources: Washington Post, MSNBC, Fox News Sunday, Youtube
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