Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies (38 page)

A close friend and benefactor of the Rathkes, ultra-liberal philanthropist Drummond Pike, volunteered to foot the rest of the bill for the embezzled funds by buying a promissory note worth $800,000. Pike founded the radical Tides Foundation, a key ACORN donor which bills itself as committed to “positive social change”; Wade Rathke sits on the Tides Foundation board of directors. ACORN whistleblowers, disgusted with the cozy cover-up, again spilled the beans to the
New York Times
:

Mr. Pike refused to confirm or deny that he had bought the note. “As a rule, I do not comment on my personal finances,” he wrote in e-mail messages in answer to questions about the deal.

But e-mail messages among Acorn’s senior executives discuss how to keep Mr. Pike’s identity secret, even as they acknowledge that some of the foundations and philanthropic advisers that have supported Acorn and its affiliates know that he bought the note.

“Does Drummond know the word is out?” Steven Kest, the executive director of Acorn, wrote on July 4. “If not, shouldn’t someone tell him?”

In a July 12 e-mail message to Mr. Kest, Acorn’s political director, Zach Pollett, wrote: “I talked to Drummond on this yesterday and had Beth Kingsley”—Acorn’s lawyer—“prepare a ‘keep your yaps shut’ confidentiality memo to people at Acorn and CCI.”
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Fortunately, the “keep your yaps shut” memo didn’t stop the whistleblowers from going public with even more damning disclosures. In June 2008, ACORN national board members Karen Inman and Marcel Reid were appointed to a special committee assigned to investigate the Rathke debacle. They took the task seriously. Too seriously for the ACORN whitewashers’ comfort. In September 2008, the two filed a petition for access to financial data related to the embezzlement. Inman and Reid, leading a group of twenty-five ACORN members who signed onto the complaint, charged that Rathke’s henchmen at ACORN were destroying key documents. Rathke continued to meddle with employees and meet with staff members regarding his brother’s financial shenanigans, the dissidents said.
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Moreover, Inman and Reid discovered, the amount Rathke embezzled may have exceeded the $1 million first reported. Reid urged his colleagues to resist “the ACORN culture of quiescence to Wade Rathke and his family so that ACORN vindicates the poor and moderate income people it represents.”
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In November 2008, the ACORN executive board responded by firing Inman and Reid and dismissing them from all ACORN duties. Those who helped cover for the Rathkes, however, kept their jobs. See no evil, hear no evil, speak no evil.

OH, WHAT A TANGLED WEB

As internal turmoil rattled ACORN’s front office, Barack Obama’s campaign was forced to admit in the summer of 2008 that it had filed misleading financial reports on its dealings with ACORN’s get-out-the-vote arm, Citizens Services, Inc. The non-profit group is housed in the same New Orleans compound as ACORN, ACORN International, SEIU Local 100 (founded by Wade Rathke), and CCI (the bookkeeping arm that hid Dale Rathke’s embezzlement).

Citizens Services was established in December 2004 to “assist persons and organizations who advance the interests of low- and moderate-income people,” according to paperwork filed in Louisiana. In a 2006 ACORN publication, Citizen Services, Inc. (CSI) is described as “ACORN’s campaign services entity.” But its executive vice president, Jeff Robinson, insisted that it was a “separate organization entirely” from ACORN .
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In August 2008, the Obama campaign disclosed that it had paid more than $800,000 to CSI and misrepresented the expenditures. Federal Election Commission reports show that from February to May 2008, Obama paid $832,598.29 to CSI for the following services:

The Obama campaign tried to shrug off the false campaign finance filing as a run-of-the-mill clerical error. But the campaign’s explanation didn’t pass the sniff test. “All of this just seems like an awful lot of money and time spent on political campaigning for an organization that purports to exist to help low-income consumers,” Jim Terry, chief public advocate for the Washington, D.C.-based Consumers Rights League, told the
Pittsburgh Tribune-Review
. “ACORN has a long and sordid history of employing convoluted Enron-style accounting to illegally use taxpayer funds for their own political gain,” Terry claimed. “Now it looks like ACORN is using the same type of convoluted accounting scheme for Obama’s political gain.”
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Indeed, there’s much more to the story of Obama’s amended campaign finance reports than Team Obama let on. CSI appears to have been a front to funnel payments to ACORN for campaign advance work. This same ACORN offshoot was the subject of a little-noticed complaint to the FEC by a Democrat who smelled something rotten going on between CSI, ACORN, and yet another left-wing tax-exempt political advocacy group, Communities Voting Together (CVT).

Former Maryland Democrat Congressman Al Wynn filed an FEC complaint in January 2008 linking several suspicious outfits used by his primary opponent, Donna Edwards, to one address in New Orleans. In a letter to the FEC, Lori Sherwood, Wynn’s campaign manager, wrote, “Based on my examination of various records and documents I believe the Donna Edwards for Congress Committee has received substantial assistance by way of unreported, in-kind contributions from organizations who profess to have operated independently of the Edwards Campaign.”
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In a 134-page complaint, Sherwood alleged that as executive director of the Arca Foundation, a social justice organization, Edwards was “responsible for administering and overseeing grants that are awarded and distributed” by the group—grants that went to some of her campaign’s biggest supporters. Nearly forty Arca Foundation grant recipients contributed $75,000 to Edwards’s campaign, including monies from board members and employees, Sherwood reported. Moreover, she noted that the tax-exempt political advocacy group Communities Voting Together (CVT), which distributed thousands of anti-Wynn flyers, is located at 1024 Elysian Fields in New Orleans—which also happens to be the address for Wade Rathke’s SEIU Local 100, ACORN, CSI, and CCI.
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“Wade Rathke, President of Elysian Fields Corporation, is also the chief organizer for SEIU Local 100, founder of ACORN, and a member of the Board of Directors of Tides Center and Tides Foundation,” Sherwood pointed out. Tides received $245,000 in grant money from Edwards’s Arca Foundation from 2002 to 2006. More connections: “Donna Pharr is the Custodian of Record for Communities Voting Together, the Assistant Treasurer for ACORN, and Deputy Treasurer for the American Institute for Social Justice and Voting for America, Inc. Both of these organizations received a combined total of $230,000 in grants from Arca between 2003 and 2006.”

Enter CSI again: “I learned that Citizens Services, Inc. qualified to do business in Maryland as a foreign corporation and gave a registered agent address of 11 East Chase St., in Baltimore,” Sherwood wrote. After checking to verify the address, Sherwood discovered no record of CSI actually having an office in Baltimore. CSI had forfeited its license to do business in Maryland two months after the 2006 primary election. Yet, the Edwards campaign paid CSI $76,866.80 in three separate payments, all purportedly for door-to-door get out the vote activities. Sherwood tracked the payments to an ACORN office address in Baltimore.

She concluded:

The efforts of these well heeled groups in promoting the Edwards Campaign raise serious questions about the involvement of corporations which have applied for and sought not for profit status but are receiving monies from a candidate for services. At the same time these groups are actively engaged in a coordinated effort to assist the Edwards Campaign. That assistance is not reflected in campaign finance reports which may violate federal reporting requirements.
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Edwards defeated Wynn. In the fall of 2008, the Federal Election Commission ruled that there was “no reason to believe” that the Edwards campaign violated campaign finance rules.
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But there is at least one other example of suspiciously large payments to Citizens Services, Inc., that calls into question what kind of work this purportedly non-partisan, non-profit offshoot of ACORN is doing. In February 2009, liberal group Ohio Citizen Action reported a $907,808 payment to Citizens Services for canvassing and $590,526.10 for “campaign consulting.”
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That’s some gold-plated get-out-the-vote and consulting services right there. The scheme has all the appearances of another left-wing slush fund for Democrat satellites exploiting non-profit status and skirting campaign finance laws.

ACORN’s own internal review of shady money transfers among its web of affiliates underscores the concern. A June 2008 report by lawyer Elizabeth Kingsley raised red flags about the incestuous relationship between ACORN and Project Vote—the offshoot Barack Obama worked for and insisted was completely separate from ACORN.
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Project Vote, a 501(c)(3) organization, was founded by left-wing lawyer Sandy Newman to register voters in welfare offices and unemployment lines with the explicit goal of turning back the Reagan revolution. In 1992, Newman hired Obama to lead Project Vote efforts in Illinois. The Illinois drive’s motto: “It’s a Power Thing.” Despite his adamant denials of any association with the group (his “Fight the Smears” website claimed “Barack Obama never organized with ACORN”), Obama’s political DNA is encoded with the ACORN agenda. The Obama campaign’s “Vote for Change” registration drive, running in conjunction with ACORN/Project Vote, was an all-out scramble to scrape up every last unregistered voter sympathetic to Obama’s big-government vision.

Kingsley’s internal review found inextricable links between ACORN and Project Vote:

Project Vote hires Acorn to do voter registration work on its behalf, and the two groups say they have registered 1.3 million voters this year.

As a federally tax-exempt charity, Project Vote is subject to prohibitions on partisan political activity. But Acorn, which is a nonprofit membership corporation under Louisiana law, though subject to federal taxation, is not bound by the same restrictions.

. . . Ms. Kingsley found that the tight relationship between Project Vote and Acorn made it impossible to document that Project Vote’s money had been used in a strictly nonpartisan manner. Until the embezzlement scandal broke last summer, Project Vote’s board was made up entirely of Acorn staff members and Acorn members.

Ms. Kingsley’s report raised concerns not only about a lack of documentation to demonstrate that no charitable money was used for political activities but also about which organization controlled strategic decisions.

She wrote that the same people appeared to be deciding which regions to focus on for increased voter engagement for Acorn and Project Vote. Zach Pollett, for instance, was Project Vote’s executive director and Acorn’s political director, until July, when he relinquished the former title. Mr. Pollett continues to work as a consultant for Project Vote through another Acorn affiliate.

“As a result, we may not be able to prove that 501(c)3 resources are not being directed to specific regions based on impermissible partisan considerations,” Ms. Kingsley said, referring to the section of the tax code concerning rules for charities.

Project Vote, for example, had only one independent director since it received a federal tax exemption in 1994, and he was on the board for less than two years, its tax forms show. Since then, the board has consisted of Acorn staff members and two Acorn members who pay monthly dues .
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Moreover, as the Consumers Rights League has documented, ACORN posted job ads for Citizens Services; Communities Voting Together has contributed $60,000 to Citizens Services, Inc. Project Vote has hired ACORN and CSI as its highest paid contractors, paying ACORN $4,649,037 in 2006 and CSI $779,016 in 2006.
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ACORN, investigative journalist Matthew Vadum joked, “moves money around its network with a boldness and agility that Pablo Escobar would have admired.”
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With equal deftness, ACORN avoids taxes with the boldness and agility of any given tax cheat serving in the Obama administration.

TAX EVADERS ‘R’ US

Vadum traced more than 200 federal, state, and local tax liens to ACORN’s office compound in New Orleans. The debt totaled more than $3 million, including the following since 2005 :
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ACORN & Co.: Community Organizers and Tax Cheats

This table, based on public records, reflects some of the largest of those active tax liens and now-released tax liens pertaining to ACORN and affiliates that list 1024 Elysian Fields Avenue, New Orleans, Louisiana 70117 as their address. A tax lien is issued only after other attempts to collect the tax debt have been made and the tax debt is seriously delinquent. If the lien has been released, that means that after the debtor failed to pay the tax owing, it eithe rpaid the tax owing or made arrangements to pay satisfactory to the creditory tax agency. There may be many, many more ACORN tax liens pending that have been sent out to other ACORN addresses.