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 “These dissenters claim the underlying petition was not properly authorized or in ACORN's best interests and should be withdrawn” says Inman.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 8 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.”