Amid the paperwork associated with a search warrant served on ACORN’s New Orleans headquarters Friday is a one-sentence acknowledgement by the embattled activist group’s attorneys that it is has been subpoenaed by a federal grand jury.

“Regarding the federal grand jury subpoenas, ACORN does not object to the provision of information and documents to the federal government…” reads a letter from Abbe David Lowell of the Washington law firm of McDermott, Will & Emery. 

The letter was included in court filings from ACORN explaining the legal basis for why they weren’t complying with a subpoena issued by Louisiana Attorney General Buddy Caldwell, which seeks a wide range of accounting information regarding the group’s many affiliated agencies. 

Lowell disclosed the federal investigation as he was writing to a New Orleans lawyer representing ACORN’s local outside accountants. The accounting firm of Duplantier, Hrapmann, Hogan & Maher was served with a subpoena from Caldwell, and, apparently, at least two from federal officials. In the letter, Lowell said ACORN was asserting accountant-client privilege, which is recognized in Louisiana, but not at the federal level.

Neither Lowell nor William Wright of the New Orleans firm of Deutsch, Kerrigan & Stiles, to whom the letter was sent, returned calls for comment regarding the federal subpoenas. An official with the office of Jim Letten, the U.S. Attorney for the Eastern District of Louisiana, said the office couldn’t confirm nor deny any investigation. The letter from Lowell does not make clear where the grand jury was convened. 

After learning ACORN was not going to comply – and hearing that two former ACORN employees had cleared their offices of everything, including computers – Caldwell’s office executed a search warrant Friday and seized more than 100 computers and other records from the activist group’s New Orleans headquarters. 

“We were not in the mood to sit around and wait a whole long time,” said David Caldwell, the assistant attorney general over Public Corruption and Special Prosecutions and son of the attorney general. “Now we don’t have to worry about anything walking off…unless it’s already gone.” 

As he spoke outside the ACORN headquarters at 2609 Canal St., investigators inside continued to load up scores of seized desktop and laptop computers, as well as other evidence. Caldwell said his office would copy the hard drives and return the computers to ACORN, perhaps within a week. 

He said attorneys representing ACORN alerted him to the fact that two employees, whom he did not identify, removed computers from the offices. ACORN national officials recently fired longtime local ACORN leader Beth Butler, the common-law wife of ACORN founder Wade Rathke. 

Caldwell credited ACORN and its attorneys for calling the computer removals to his attention and said they acted in good faith. Still, the search warrant was necessary, Caldwell said, because “they can’t watch everybody.” 

Armed investigators in SUV’s arrived about 8 a.m. at the organization’s headquarters at 2609 Canal Street. By 2 p.m., they had loaded four vehicles with computer hardware. Caldwell spokeswoman Tammi Arrender said ACORN employees were polite and cooperative with officials, though they were irritated by the presence of reporters and news media cameras. 

The attorney general has been investigating the national activist groups since June on allegations of payroll tax fraud, covering up an embezzlement, and mismanaging a retirement fund, among other things. 

The attorney general has already served subpoenas on the former head of ACORN, Rathke, whose brother is alleged to have improperly charged at least $1 million to ACORN-related credit cards. Whitney Bank and the accountants have also been hit with subpoenas. 

Rathke and his brother, Dale, who worked on the financial side of the house, were ousted from their positions with the primary ACORN organization, though Wade Rathke continues to work with an international offshoot. 

Buddy Caldwell made headlines nationally recently when he said in court documents that Dale Rathke might have embezzled up to $5 million, though ACORN officials have disputed that amount. ACORN CEO Bertha Lewis has said that figure was cited as the amount needed to clean up the mess created by the Rathke brothers, not the amount taken and later repaid.

It all came about when a local ACORN volunteer, Vanessa Gueringer, remarked to the Times-Picayune that President Obama should spend more time in the Lower 9th Ward of New Orleans when he was going to visit there last week.  The Lower 9th, of course, was hardest hit during Hurricane Katrina 4 years ago.

It seemed like a fairly harmless request, and one that would certainly expect to read from ACORN in a newspaper.

Well, it appears Bertha Lewis and ACORN national still are a bit touchy (and powerhungry?).  Lewis was supposedly coincidentally flying down to New Orleans the very next day.

Lo and behold, Lewis cited “a lack of accountability to process” in figuratively lopping off Butler’s head, who apparently failed in her duty to keep her minions quiet.  From the Times-Picayune:

On Sunday,  ACORN Chief Executive Bertha Lewis said the remarks,  which were not uttered by Butler,  were “without authority and do not reflect the position of the national leadership.” Lewis said she would “be personally going to New Orleans to deal with the individual involved.”

The Pittsburgh Tribune-Review issued a correct analysis:

The firing of Beth Butler, a 37-year ACORN veteran, from her post as executive director of Louisiana ACORN by national ACORN leaders has sparked infighting that confirms that the group’s real agenda — at any level — is more about power than about helping the downtrodden.

Now comes word that ACORN national has taken over the Louisiana chapter, further distancing itself from the Rathkes and attempting to secure that chapter’s assets.

And the Rathkes/Butlers are responding in-kind:

Yet local ACORN leaders, including the recently deposed Beth Butler, say they are nearing completion of a long-planned separation from the national organization, setting up shop in new offices but under the same name.

…

Gueringer said local ACORN figures are willing to go to court to gain control of the Louisiana ACORN resources, including membership dues, property and recovery grants that are now in control of the national organization.

Gueringer said she has not talked with local staff members but believes they will be welcomed in the new organization. “I assume, like everybody, that those people need a job,” she said. “Those folks have a tough decision to make about what organization they will be a part of.”

It certainly didn’t take long for the ACORN dandelion seeds to take flight, landing elsewhere to take root and continue its work.

Lastly, we wanted to bring attention to the t-shirt Vanessa Gueringer wore to the Wade Rathke book signing in New Orleans back in late July, to dispel any myth about ACORN’s true agenda.

“I’m Recognized to be a Fairly Dangerous Fellow Out There in the Community” – Wade Rathke

Let’s be honest, if Wade Rathke saw me walk into his book signing last Tuesday, he wouldn’t have been at his most candid.  I wanted insight into the man who created this racket that is the Association of Community Organizations for Reform Now, or is it the American Institute for Social Justice, or Citizens Consulting Inc?  I’m still not too sure.  I know it operates under 361 different affiliates in at least 43 states and the District of Columbia.

In his newly released book Citizen Wealth, he paints himself as a modern day Robin Hood, stealing from the evil faceless corporations to give to the poor.  But as he recounts these campaigns it becomes clear the corporations have faces, their CEOs, who he doesn’t hesitate to harass at home to demand financial concessions.  Wade’s stilted story almost makes him sound noble as he provides innocuous reasons why he would like to collect and store copies of people’s personal financial records and birth certificates or as he tries to rationalize why people would be well served by becoming dues paying ACORN members.

These past few months I believed Wade’s the blissfully ignorant captain whose been stripped of his command but still seems intent to go down with the ship.  He hasn’t “run” the organization since the very public revelation that his brother embezzled close to $1 million from ACORN and Wade went about covering it up.  He was negotiated out of the coveted “chief organizer” role that he had held for decades.  The ACORN Board allowed him to retain control of ACORN International, but when public pressure started building, he even went ahead and changed its name to COI – Community Organizations International.

Even in exile he denies that ACORN is a criminal enterprise and claims that allegations that federal and tax-exempt funds have been used for political purposes are a “complete fabrication.”

I had to hear him speak.  I had to see for myself if he really bought what he was selling.  But let’s be real.  I’m a twenty-eight year old Republican lawyer… and I look like one.  I wear Brooks Brothers suits, bold ties, and nine times out of ten there’s a pair of elephant cufflinks on my wrists.  If he saw me coming I doubted he would be as open in his proselytizing for community organizing.

I had to tone it down a notch.  No, I didn’t borrow James O’Keefe’s vintage chinchilla shoulder throw.  I just threw on jeans and a t-shirt, jumped in my SUV, and headed off to see ACORN’s Founding Father.

I arrived early and grabbed my seat in the middle of the room.  I expected a crowd.  Instead I was greeted by six reporters and ten supporters.

Wade had barely gotten started when that folksy “aw shucks” Wade Rathke persona took over:

“It’s all a new ride on the rodeo to me” when discussing how he is no longer accountable to ACORN members.

“The Single largest success in the last 20 years of the organized labor movement is home healthcare workers.”

On the Cloward-Piven model he cited his book which laments the fact that Americans who are eligible for government programs are not taking advantage of them.  He seemed wistful in his dreams of “maximum eligible participation.”

Then he hit his stride…

“I think it’s ridiculous that an organization like ACORN has to be involved in voter registration”

“We were raising up to $20 million to register voters before I left”

Throughout his remarks he was a steadfast defender of ACORN.

Maybe he truly believes in ACORN or whatever affiliates it’s doing business as.  Maybe he’s just doing right by the organization he built that did right by him.  It did provide him a steady living for decades, his embezzling brother too.  But they’re not the only members of the ACORN family.  ACORN also employed Rathke’s wife Beth Butler, his daughter Dine, and his son Chaco.  Who’d have expected nepotism in New Orleans?

Wade noted that “I’m a huge fan of ACORN, I pay my dues now.”

After hearing him speak I must admit, I was wrong about Wade.  He’s not the captain going down with his ship.  He’s more like the Iraqi Information Minister “Baghdad Bob” – in denial, steadfastly claiming victory even as American tanks rolled past.

This revelation is important because, as former ACORN national board member Charles Turner said earlier this year on “The Glenn Beck Program,” CCI “is where the shell game begins.”

“ACORN has over 200 different entities that the money gets moved around to – for this purpose to that purpose, this organization to that organization,” said Turner. “We believe the way the money has been moved around, they’ve been laundering money.”

ACORN founder Wade Rathke (left) and ACORN enabler Drummond Pike (right) of Tides Foundation in an undated photo taken in Peru. On the wall is a large poster of Communist icons Che Guevara and Fidel Castro.

When former ACORN activist Ron Sykes was informed by this reporter that ACORN affiliate CCI registered him as a lobbyist, he was angry. “It’s like identity theft,” said Sykes in an interview. “I have no idea why they registered me. I didn’t register myself and was not aware that they were doing it.”

Whether this reflects ACORN’s institutional carelessness or a calculated effort to deceive, the discovery throws some light on how ACORN treats its employees, moves money around the ACORN network, and deals with the federal government. Federal lawmakers have known for years about ACORN’s unorthodox and possibly illegal practices, including its use of government resources to promote legislation and its extensive commingling of funds within its network of affiliates.

Former ACORN officials say these activities are controlled by the mysterious CCI, which is located in ACORN’s headquarters in New Orleans. CCI handles the financial affairs of hundreds of affiliates within the ACORN network. ACORN member dues, government money, and foundation grants, are all sucked into the CCI vortex often never to be seen again.

Although CCI is registered as a nonprofit corporation in Louisiana, it does not appear to have sought tax-exempt status from the IRS. Surely it has declined to seek tax-exempt status because entities with that status have to publicly disclose financial data. This is the same approach employed by George Soros’s Democracy Alliance, a piggybank for left-wing political infrastructure that is registered as a taxable nonprofit in order to prevent public scrutiny of its finances and internal affairs.

Sykes said he came to the nation’s capital in 2006 as an intern for ACORN’s national legislative program, working for it from April 2006 to February 2007. He said he was never a lobbyist although he did help to prepare lobbyists to meet with lawmakers and their staff on issues of interest to ACORN such as voting rights, housing programs, minimum wage laws, and predatory lending. Occasionally he went along on Capitol Hill visits, but arguing for or against specific legislation was not his job, he said.

According to forms filed under the federal Lobbying Disclosure Act by CCI, Sykes lobbied as an employee of CCI on behalf of ACORN between Jan. 1, 2006 and June 30, 2007. He is described in three disclosure forms as a “fellow.” When a person ceases lobbying, the registering organization (in this case CCI) is supposed to declare this fact, but there is no indication in the online lobbying disclosure database maintained by the Office of the Clerk of the House of Representatives that CCI did so.

Sykes said he received a scholarship from ACORN to help him cover living expenses but that it was abruptly cut off months ahead of schedule in February 2007. During his internship he became curious about ACORN’s financial affairs and began to ask a lot of questions about where the money was going.

“I guess they got a little irritated and the scholarship money from the ACORN executive board was cut off,” Sykes said.

He found out that his internship was coming to a premature end when he received an email and a telephone call from the legendarily smooth Wade Rathke, who was then chief organizer (CEO) of ACORN. Rathke offered him thanks and told him that he did a great job. “I asked him if there were any positions open and said I’d like to stay but he said there was no funding at this time for a salary for me,” Sykes said.

A former senior ACORN official contacted for this article, Marcel Reid, who was a member of ACORN’s national board from October 2005 to late last year, said she and other members were unaware that CCI even did lobbying.

Legal reform advocate and lawyer Zena Crenshaw said CCI’s behavior raises several red flags.

“They certainly should be segregating 501(c)(3) funds from their lobbying activities,” said Crenshaw, a founding director and executive director of the National Judicial Conduct and Disability Law Project Inc. (NJCDLP). “I’m not sure how you can segregate them if the lobbyist is handling the money. I don’t know how CCI can be both a lobbyist and a financial manager handling ACORN’s 501(c)(3) funds.”

“This just confirms the need for an examination of the organization’s affiliates,” said Crenshaw, who is also chairperson of the legal affairs committee of ACORN 8, a group of former ACORN members co-founded by Reid that is calling for a forensic audit of ACORN.

ACORN was warned by its own lawyer Elizabeth Kingsley of Harmon, Curran, Spielberg & Eisenberg last year that its lack of internal firewalls and its chaotic organizational structure were likely to land ACORN in hot water. Kingsley’s letter to her client was excerpted in a report by Republican investigators on the House Oversight and Government Reform Committee.

The investigators found that CCI should have paid an excise tax on any lobbying expenditures it made, but noted that evidence indicates the spending was never reported to the IRS.

The investigators also found that by “intentionally blurring the legal distinctions between 361 tax-exempt and non-exempt entities, ACORN diverts taxpayer and tax-exempt monies into partisan political activities.” They argued that ACORN should be stripped of its jealously guarded tax-exempt status because it illegally spends taxpayer dollars on partisan activities, commits “systemic fraud,” and violates racketeering and election laws.

“Operationally, ACORN is a shell game played in 120 cities, 43 states and the District of Columbia through a complex structure designed to conceal illegal activities, to use taxpayer and tax-exempt dollars for partisan political purposes, and to distract investigators,” the report said. Structurally, it is “a chess game in which senior management is shielded from accountability by multiple layers of volunteers and compensated employees who serve as pawns to take the fall for every bad act.”

The report examines the ACORN network’s abusive interlocking directorates, and claims that the group deliberately organized itself to escape legal and public scrutiny. “ACORN hides behind a paper wall of nonprofit corporate protections to conceal a criminal conspiracy on the part of its directors, to launder federal money in order to pursue a partisan political agenda and to manipulate the American electorate.”

ACORN uses interlocking directorates, which refers to individuals serving as directors on multiple corporate boards, in order to subject its network of affiliates to centralized control from the top. Having interlocking directorates may be widespread and lawful, but the practice raises questions about the quality and independence of board decision-making.

While the ACORN network claims to be a “family” of organizations, embodying the ethos of community organizing, which stresses local action and decentralized authority, it is run by senior officials who treat its national board as a rubber stamp.

It’s worth noting that all three lobbying disclosure forms were signed digitally by Donna L. Pharr, who is listed as CCI’s assistant treasurer. The services of the ubiquitous Pharr, herself a walking, talking example of interlocking directorates, are in demand all throughout the ACORN empire. She’s on the board of dozens of ACORN affiliates including ACORN Housing Corp. and the American Institute for Social Justice Inc. Pharr is also deputy treasurer of Minnesota ACORN Political Action Committee and is listed in a Michigan Bureau of Elections filing as the contact person for Communities Voting Together, a 527 pressure group.

CCI itself has a long and checkered past.

In 1996 the federal Department of Labor sued CCI. The next year a federal court ordered CCI to cough up $10,000 in back wages.

CCI currently owes at least $400,117 in back taxes to the IRS, Arkansas, District of Columbia, Indiana, Louisiana, and Maryland, according to the Nexis tax liens database. This figure excludes the $442,533 in tax liens that the IRS has rescinded over the past five years after they were presumably paid. Tax liens are only issued by creditor tax agencies after a tax debt has become seriously delinquent. The ACORN network has had millions of dollars in tax liens filed against it since 1989.

Last year Wade Rathke was dumped as chief organizer of the group he founded after ACORN’s national board learned that he failed to notify police when he discovered in 2000 that his brother Dale, who was a senior official at CCI, had embezzled $948,000 from the group.

Wade Rathke engineered a cover-up for his brother and allowed him to leave the payroll of CCI to work as his $38,000 a year “assistant” at ACORN headquarters. The missing money was disguised as a loan to an officer on the books of CCI.

Despite being expelled from ACORN, Wade Rathke remains involved with at least five ACORN affiliates. Rathke recently changed the name of ACORN’s international consultancy, ACORN International, to Community Organizations International. Both ACORN and Rathke maintain that COI is no longer an affiliate in the ACORN network.

Rathke also remains chief organizer of the New Orleans-based Local 100 of SEIU, another ACORN affiliate he founded. He does not appear to have stepped down as president and director of Affiliated Media Foundation Movement (AM/FM), an ACORN affiliate that produces news segments for eight alternative radio stations. He is also publisher and editor-in-chief of Social Policy magazine, a quarterly journal published jointly by two ACORN affiliates (ACORN Institute and American Institute for Social Justice).

And Rathke’s family members remain employed by ACORN. His common law wife, Beth Butler, and his son and daughter still work for ACORN. Butler is ACORN’s regional director for the Southeast U.S.

(This article was originally published by the American Spectator on Aug. 17, 2009.)