Michael Gaynor
Wade Rathke's very worried about a congressional investigation of ACORN
By Michael Gaynor
November 15, 2010

Ironically, that embezzlement by Rathke's brother, its cover up as a purely internal matter for many years and then the leaking of the story by a disgruntled ACORNian will turn out well for America, albeit not in time to prevent the election of Obama and a Democrat-controlled Congress that tugged America to the left with programs exemplified Obamacare designed to fundamentally transform an America that needs faithful adherence to its fundamental values, not fundamental transformation to socialist income and wealth redistribution and Big Government.

In 1970 wily Wade Rathke founded ACORN, initially Arkansas Community Organizations for Reform Now, later Association of Community Organizations for Reform Now.

Rathke served as ACORN's Chief Organizer for about 38 years and left only after the way he had dealt with his brother's embezzlement of ACORN funds leaked.

Rathke's website, www.chieforganizer.org, permits Rathke to share his views with the world and he does so, frequently.

These days Rathke is warning House Investigations Committee Chair-in-waiting Darrell Issa not to delve into the origins of the financial crisis.

In "Darrell 'McCarthy' Issa and the Non-Profit Purge" (http://chieforganizer.org/2010/11/05/darrell-%e2%80%9cmccarthy%e2%80%9d-issa-and-the-non-profit-purge/), Rathke wrote:

"Issa is vulnerable...because in his own district, California #49 with huge portions of Riverside County and northern San Diego County, he is in fact sitting on a powder keg. Riverside is in a virtual tie for #1 in the number of homes at some stage in the foreclosure process in California involving 5% of the property holders and more than 35000 homes in the first six months of 2010. This is some bad stuff sticking to Issa's shoe. Folks barely hanging on wouldn't necessarily think they have a friend in Issa, since he was ranked as perhaps the richest member of the 111th Congress with over $225 million net worth. He might understand afterall that 'all politics is local' and he has to do more than just talk about it to hold onto a base in the 49th.

"Add that to the fact that his district is less than 60% Anglo and a solid 30% of his district is Hispanic though it goes without saying he's terrible on immigration reform issues, and there are some unhappy people in the 49th . Gore won this district when he ran for President. Bush did better on his second shot, but McCain barely won against Obama. If we had a real progressive movement in this country, Issa would be on a short list of targets for retirement from Congress."

Rathke wittily depicts Issa as "scary."


"Darrell Issa...was interviewed the day after the election about how he saw his 'work' shaping up. It was a little late for Halloween, but it was scarier than the worst fright movie.

"Some commentators took Issa's remarks as conciliatory, which must be the result of post-traumatic stress or an abused child syndrome, because every one of Issa's comments was buried in speculations, inaccuracies, illegalities, and opinions masking as facts."

Rathke elaborated:

"[Issa] started out with some comments about wanting to be a 'reformer-in-chief' and swearing that he wanted to not just bring down Obama, but sully up Bush as well by naming out Freddie, Fannie, and Countrywide as targets and throwing in the BP and Gulf's oversees at the Mineral Management Service for good measure. This is well plowed ground, so good luck, Congressman, though given the right's obsession with the Community Reinvestment Act and the blame game about CRA and this crises (totally unfounded), I don't really have good feelings about his motivations there either."

If Issa's motivation is to uncover the truth and put the financial crisis in context — and it appears to be, then Team Obama has reason to be very nervous and Rathke should not expect to have "good feelings."

What exactly did Issa say that Rathke admittedly found "frightening"?


"I think it's very important that we look at ACORN as something that occurred, it was criminal activity and it used government money and nonprofit money both to do politics. There's certainly going to be other examples on the left and on the right where we at least have to deny them nonprofit status and government money if what they're doing is being overtly political..."

"But I do think that the people understand that ACORN needed to go away, it went away and we'll continue to make sure that there is no equivalent."

Rathke's response:

"So without any real investigation he's sure that ACORN equaled 'criminal activity.' He's equally sure that ACORN used 'government money and nonprofit money' to 'do politics' despite GAO and agency by agency investigations that have issued reports finding that no such thing occurred. As I have said before, he obviously still believes in the sloppy work of his staff that ACORN was a 501c3 tax exempt nonprofit, rather than a plain vanilla nonprofit under the laws of the State of Arkansas (where ACORN was founded in 1970) with no special tax status.

"Reading and listening to Issa, ACORN seems mostly an excuse, sort of a headline hiding the real subtext. He's coming for you, brothers and sisters, and he's coming after your tax exempt status. Maybe it wasn't such a good idea to simply stand around with hands in your pockets and let ACORN take the fall and suck the oil off the undercarriage of the bus?

"And please forget the hopes and aspirations of low-and-moderate income people. His comments that ACORN 'went away and we'll continue to make sure that there is no equivalent' speaks to an abuse of power certainly, but also a level of transparency on mission and motives that leaves little room for speculation about Issa and his agenda for witch hunting, McCarthy style investigations and hearings to come."

Rathke has ONE point: ACORN the corporation is not a 501c3.

BUT...as Rathke himself states in his biography at his website: "The ACORN family of organizations includes radio stations (KNON and KABF), publications, housing development and ownership (ACORN Housing), and a variety of other supports for direct organizing and issue campaigns, such as Project Vote and the Living Wage Resource Center."

Project Vote IS a 501c3 and if it functioned as an alter ego of ACORN, ACORN and Rathke have a big problem.

ACORN whistleblower Anita MonCrief simultaneously worked as a strategic writing, research and design consultant for ACORN and a development associate with Project Vote in the same Washington, D.C. office. She was paid by Project Vote and had an ACORN emaill address. She worked with Project Vote donors as well as designed ACORN's 2005, 2006 and 2007 Political Operations Yearend PowerPoint presentations. She was sued by Project Vote in 2009 and brought ACORN into the lawsuit as a counterclaim defendant, alleging that Project Vote was an alter ego of ACORN. Rather than proceed with discovery (including depositions), ACORN and Project Vote put an end to the harassing lawsuit.

In 2009, with Democrats in control, the House of Representatives did not pursue an investigation of ACORN, despite the testimony of Heather Heidelbaugh, Esq. about a Pennsylvania ACORN case and Ms. MonCrief. See http://judiciary.house.gov/hearings/pdf/Heidelbaugh090319.pdf and Ms. MonCrief's "How This Reluctant Whistleblower Decided to Tell All" (http://hotair.com/archives/2009/10/17/how-this-reluctant-whistleblower-decided-to-tell-all/).

Democrats won't be able to stop such an investigation after the next Congress convenes in January.

Sunlight is the best disinfectant and President Obama is no longer generally immune from scrutiny.

Rathke also claims that ACORN is dead and he has been "out of the loop" since he left ACORN and using the Internet to learn what's going on.

Rathke's "ACORN's Bankruptcy: Not Debts, Cash Flow" post on ACORN's bankruptcy filings (http://chieforganizer.org/2010/11/08/acorn%e2%80%99s-bankruptcy-not-debts-cash-flow/) merits scrutiny.

Rathke: "Having been out of the loop for over 2 years, I thought it was my duty to read through the various bankruptcy filings made by ACORN and six of its associated outfits, including the notorious Citizens Consulting, Inc. (CCI), which so enthralled the right in order to really understand the deeper 'why' behind the bankruptcies. The conservative chorus and blogosphere had been less than edifying on this issue, so I wended my way through the PACER registration that allows lawyers and folks like me to access court filings, found my way to the eastern district of New York bankruptcy court in Brooklyn and for 8 cents per page for the first 30 pages, downloaded the whole package."

For those who think that Rathke depends upon conservatives to keep up with ACORN, there's a bridge near that bankruptcy court in Brooklyn you might want to buy.

Rathke presented these "tentative conclusions":

"It was all about the cash flow and not at all about the debts. It is inescapable to conclude that ACORN, as the organization has claimed repeatedly to anyone who would listen, was simply deserted by its funders and friends. The income from its members seems to have continued right to the end or until they were moved over to new state organizations. The debts were manageable or trivial.

"I still cannot understand why management and leadership decided to file bankruptcy. The story is not in the debts or even the cash flow really. Clearly they just could not see a better future within the time frame they were willing to commit to the work. Who knows what's right or wrong there? People had clearly had enough, and that's what moved the decision. I can remember being in a similar situation in 1970 with Massachusetts Welfare Rights where I almost threw the towel in while watching a huge leadership dispute there. It's a dark place where you move to any light you can find.

"I wrote a memo in the 70's about cash flow management called 'float, stretch, burn.' Liz Wolff at CCI and Bertha seem to have done a good job of managing the end game once they pulled the plug. Selling our New Orleans buildings, even at the bottom of the market, gave them some money and leverage to play with that helped no doubt make this all come together more smoothly than it might have been, but it's sad to read rather than pathetic."

Why the bankruptcy filings?

Rathke's explanation: "management and leadership...just could not see a better future within the time frame they were willing to commit to the work."

The real story: the ACORN name had become toxic, of course, and if it is dissolved in bankruptcy, it will be argued that there's no need to investigate it!

The key words in Rathke's "tentative conclusions" are "moved over to new state organizations" and they are Rathke's own words.

ACORN has transformed. It is not disappearing.

Rathke: "ACORN...allow[ed] the local organizations to rebrand, separately incorporate and go their own way.

Predictably, those new state organizations are not using the toxic word ACORN.

Rathke seemed intent on making the case that ACORN's financial problems post-dated his Chief Organizership. For example, Rathke wrote: "I'm clueless what this $750,000 claim might have been from PA Charities Commission, but it must have cropped up over recent years and there must be some politics preventing settlements."

I'm looking forward to finding out the particulars of the PA Charities Commission claim.

If the State of Pennsylvania does not receive what it is do, it would be a great shame.

Rathke both minimized ACORN's debts and criticized both "new management and donors":

"The debts in many ways almost seem modest. The advertised $4 million under close inspection is probably less than $1.5 million in 'hard' debts, and most are small and unfortunate."

"The big ticket items were mostly debts incurred as the crises engulfed ACORN and its new management and donors managed to gain the whip hand over the organization without any corresponding commitment to provide the carrots after administering the stick. There is some justice that many of the non-bailout bills were left unpaid to PR firms, an army of law firms including over $100,000 to [Proskauer] for the whitewash that no one read, image consultants, and others."

Amazingly, in discussing a $1,000,000 loan to ACORN (in a way that suggests familiarity with more than bankruptcy filings), Rathke blames the bankruptcy on ...funders!

Rathke: "The biggest debt was the controversial $1M loan from Forest Ratner, the Atlantic Yards and Nets arena developer in Brooklyn that has been so contentious. ACORN had negotiated a community benefits agreement there for badly needed affordable housing, which unfortunately has not been built in the downturn. Opponents of the project are legion among the vast community who were not moved by the need for affordable housing in Brooklyn for a host of [reasons]. In a shrewd move to consolidate support for her candidacy as the chief staff member of ACORN, Bertha Lewis in the fall of 2008 negotiated a combination deal with Ratner to prove her fundraising prowess involving about $400,000 in grants and $1M in loans, despite onerous repayment and penalty terms. With the voter registration crises swirling around ACORN, Bertha pulled the one string where she had leverage from her New York base — damn the torpedoes — realizing that Brooklyn was so polarized around Atlantic Yards and ACORN that it would hardly matter much more, and the likely criticism was secondary to her desperate need for bridge money while she waited for funders to grow a backbone. I love the fact the fact that in the end, she stiffed him, and I bet he's still smiling in spite of himself. He's a big time developer, so he knows what it means to go bankrupt and short folks when the pieces don't come together, and a million plus was still a fair deal to have a friend in Brooklyn in the scale of things."

Ironically, that embezzlement by Rathke's brother, its cover up as a purely internal matter for many years and then the leaking of the story by a disgruntled ACORNian will turn out well for America, albeit not in time to prevent the election of Obama and a Democrat-controlled Congress that has pulled America to the left with programs exemplified by Obamacare designed to fundamentally transform an America that needs faithful adherence to its fundamental values, not fundamental transformation to socialist income and wealth redistribution and Big Government.

© Michael Gaynor


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

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Michael Gaynor

Michael J. Gaynor has been practicing law in New York since 1973. A former partner at Fulton, Duncombe & Rowe and Gaynor & Bass, he is a solo practitioner admitted to practice in New York state and federal courts and an Association of the Bar of the City of New York member... (more)


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