The People’s Movement to Reform ACORN
The 2008 historic election season likely marks the end of ACORN's uncanny ability to remain both prominent and relatively obscure. ACORN, the Association of Community Organizations for Reform Now, is the nation's largest community organization of low- and moderate-income families, working together for social justice and stronger communities. Since 1970, ACORN has grown to more than 400,000 member families, organized in 1,200 neighborhood chapters in 103 cities across the U.S. and in cities in Canada, Mexico, the Dominican Republic, Argentina, India and Peru.
For many, the group is synonymous with community organizing. Which is why so many Republicans among others, may relish ACORN writhing in the media spotlight. Senator John McCain is using recent controversy at ACORN to impugn Senator Barack Obama. However, GOP backed organizations have also been accused of voter fraud by switching individual party identification on voter registration cards.
Recent events seek to quash intra-corporate disputes when ACORN faces unprecedented upheaval, arguably from outside forces. Courageous whistleblowers Karen Inman and Marcel Reid continue the fight they began for transparency and accountability within ACORN. But recent actions by ACORN are cautionary tales about inter-corporate relationships, and management and control of non-profit corporations. And the breach of fiduciary duties and trust following a $1 million embezzlement dating back to 1999.
The Rathke Embezzlement
The embezzlement was originally concealed from the full Association Board, after which fellow ACORN board members elected Karen Inman and Marcel Reid to an interim management committee (IMC) to investigate the fraud after firing Wade Rathke, their founder and Chief Organizer. According to board minutes, Wade's termination followed news that he concealed for nearly a decade, an almost one million dollar embezzlement from ACORN during the years 1999 to 2000, allegedly by his brother Dale Rathke.
KAPFCU Federal Credit Union a certified community development financial institution joined Inman and Reid in overseeing a team of professionals to identify, preserve, account for, and otherwise protect ACORN assets and interests. The team includes attorneys who secured a temporary restraining order and are seeking additional injunctive relief for ACORN, the IMC, and eight board members dubbed the “ACORN Eight”. Following these terminations, the ACORN board voted unanimously “that funds be created to allow (Inman and Reid) access to professional consultants . . . so that the will of the Association Board be carried out.”
The IMC initially filed a TRO to preserve the financial books and records, and safe guard ACORN assets. Their case is ACORN vs. Rathke, et al., no. 08-8342, before the Civil District Court for the Parish of Orleans, State of Louisiana. Yet various ACORN staff and board members disparage what the ACORN Eight has done. “These dissenters claim the underlying petition was not properly authorized or in ACORN's best interests and should be withdrawn” says Inman.
In October, Louisiana District Court Judge Michael Bagneris ruled in the referenced ACORN vs. Rathke, et al., case no. 08-8342, that ACORN and its affiliated organizations shall not destroy ACORN corporate books and records. He refused to dismiss the IMC's petition for ACORN. Instead Bagneris instructed ACORN directors to settle on who are its authorized representatives at its National board of directors meeting in New Orleans.
Reid and Inman arranged for experts to address the matter, personally and in writing. The two claim to “ultimately hope our fellow board members understand that ACORN remains susceptible to inappropriate manipulation by Wade”. Both add, “we were authorized and need to pursue a forensic investigation, independent audit, and expedited discovery to identify and protect ACORN assets and interests.” Inman and Reid consider it “negligent for any lawyer to advise differently, particularly as Wade travels outside the U.S., possibly putting ACORN assets beyond the reach of American courts, supposedly on behalf of ACORN International.”
However, in a 38 to 12 vote, the ACORN Board of Directors voted to withdraw the Preliminary Injunction filed to access records and safeguard assets filed following the embezzlement. Judge Bagneris instructed ACORN directors to select authorized representatives at its Annual National Board of Director’s meeting in New Orleans. However, Judge Bagneris also declared that even if the ACORN board voted to withdraw the preliminary injunction filed by the IMC; that individual voting members of ACORN have an absolute right under Louisiana law to review ACORN’s corporate books and records. Judge Bagneris continued the proceedings until November 7, 2008. And we prepared additional document requests pursuant to the Writ of Mandamus from individual Association Board members which remain outstanding. Thus the reform the IMC began is being carried out through the ACORN 8 campaign.
When asked to summarize the strategy their opponents support, Inman and Reid explain it “is substantially managed by people who helped Wade conceal his brother's embezzlement; involves private negotiations with Wade with no legal constraints on his part; hijacks the prerogative entrusted to us by board vote; and as is being implemented through unauthorized contracting.” Both Inman and Reid complain that “such deference to Wade and disregard of ACORN board members nearly transformed ACORN into a Rathke family alter-ego over the years.” ACORN has a 53 member board consisting of low income neighborhood representatives. The sheer size and composition of this board makes it susceptible to manipulation by ACORN staff and, outside lawyers and consultants.
Media reports by the New York Times, The Times Picayune, and others suggest ACORN Eight detractors are ACORN's board president, Maude Hurd, and its interim chief organizer, Bertha Lewis. Inman and Reid add Steve Kest to the list, ACORN's executive director. They also include attorney Beth Kingsley of the D.C. law firm, Harmon Curran Spielberg & Eisenberg LLP. Kingsley is reportedly identified as ACORN's “outside counsel.”
What is ACORN?
Since 1970 ACORN has taken direct action and won victories on issues of concern to our members, including better housing for first time homebuyers and tenants, living wages for low-wage workers, more investment in our communities from banks and governments, and better public schools. The hypocrisy of ACORN lies in the fact that the organization made famous by fighting for the voices of low income people to be heard in America, actively squashes these same voices of dissent within the organization.
Referencing ACORN, Marcel Reid explains that “ours is the voice for hundreds of thousands of otherwise disenfranchised people.” Noting that voice must now rise above questionable voter registrations and America's financial crisis, Reid cautions fellow board members to overcome “the ACORN culture of acquiescence to Wade Rathke and his family so that ACORN vindicates the poor and moderate income people it represents.” Reid and Inman emphatically assert with support of the full ACORN Eight, that they were “authorized and need to pursue a forensic accounting, independent audit, and expedited discovery to identify and protect ACORN assets and interests.”
Ironically, the ACORN board voted to withdraw the lawsuit – but instead to continue an internal investigation into the embezzlement. This is essentially the same strategy the executive committee and senior staff members attempted when they learned about, and then concealed, the embezzlement from the full board. Thus, today’s vote indicates that the full board may have acquiesced to the original cover up – even if they had known about the fraud at the time. However, authorizing the IMC was the Association Board’s first attempt to exercise autonomy and control over ACORN by its membership.
Struggle for Control
The Association Board is ultimately responsible for everything that happens at ACORN, whether it is the Rathke embezzlement or recent allegations of voter fraud. The board can not simply say we did not know about the alleged fraud, the board must demonstrate that they acted reasonably, responsibly and with due diligence in performing their fiduciary duties. The IMC petition, a TRO and Preliminary Injunction were the first steps in that process. Thus, the IMC lawsuit was actually the best protection for the ACORN board of directors.
But ACORN does not provide board insurance for the Association Board. ACORN can not get board insurance since ACORN staff refuse to provide independently audited financial statements. And Presidential campaigns have already requested a special prosecutor to investigate ACORN. So when (not if) a federal investigation occurs; the actions and the inactions of the Association Board will be examined. Thus, the IMC lawsuit and other recommendations are the only actions that the Association Board can rely on as any defense to the federal investigations.
Consequently, the real struggle at ACORN is between the Association Board and ACORN staff. Under the Rathke’s reign, senior staff wielded complete control of ACORN instead of the Association Board. Prompted by embezzlement which occurred in 1999 and 2000; the Association Board has recently taken charge of ACORN through the actions of the IMC. Therefore, it is no surprise that these actions have caused great upheaval within ACORN and its traditional cronies.
We are current board members and active members of the Association of Community Organizations for Reform Now, known as the ACORN 8+ and we are concerned with recent accounts of fraud and mismanagement at ACORN. Consequently, we are fighting to reform our organization and leadership following our notification of embezzlement at ACORN. Our demands are simple a full forensic examination of the initial fraud and embezzlement, followed by a full independent audit of ACORN and all related entities, which must be controlled by an Audit Committee that excludes ACORN staff and executive committee member who might be implicated in the fraud and cover up. And the immediate termination of all senior staff, executive committee members and contractors who knew about, and then conspired to conceal the embezzlement from the Association Board.
YES WE CAN... reform ACORN
We are few, but we are mighty; there remains strong board and member support who are fighting to preserve the integrity of this important organization. More importantly, we have already accomplished more to reform ACORN than any attempt in the past. We have assembled a team of seasoned community organizers and qualified professionals. We have local organizers deployed in a 12 state campaign to reform ACORN from the ground up, and we are operating under the authority of a court mandate.
Marcel Reid, ACORN 8 chair explains that “ours is the voice for hundreds of thousands of otherwise disenfranchised people.” Noting that voice must now rise above questionable voter registrations and America's financial crisis, Reid cautions fellow board members to overcome “the ACORN culture of acquiescence to Wade Rathke and his family so that ACORN vindicates the poor and moderate income people it represents.”
ACORN can not change itself without your help, since “Power concedes nothing without a demand, it never has and it never will.” – Fredrick Douglas. Our goal is to reform ACORN to insure truth and transparency within the organization, and to our supporting sponsors, and our general membership. But we need your assistance to support this important change. The number “8” symbolizes a new beginning; the ACORN 8 represents a new beginning for ACORN... of the people, by the people and for the people.