State, federal officials cut off money to ACORN
by Jonathan Tilove and Robert Travis Scott, The Times-Picayune
Thursday September 17, 2009, 9:35 PM

From Baton Rouge to Washington, the effort to cut off public financing for ACORN proceeded Thursday along with word that the Louisiana attorney general is investigating whether the group and its affiliates failed to pay employee withholding taxes to the state.

The former ACORN headquarters at 1024-26 Elysian Fields Ave. is up for sale.

Louisiana Gov. Bobby Jindal issued an executive order to keep any state money from going to the controversy-wracked Association of Community Organizations for Reform Now, which has its national headquarters in New Orleans.

According to the state's Division of Administration, no state agencies have existing contracts with ACORN.

In Washington, the U.S. House voted 345 to 75 to block any federal financing for ACORN, and the Senate voted 85 to 11 to do the same for any money in the financing bill for the Department of Interior and the Environmental Protection Agency.

The U.S. Senate voted 83 to 7 Monday to prevent ACORN from receiving money out of the transportation and housing bill.

Louisiana Attorney General Buddy Caldwell said his investigation started after he received a complaint from former members of ACORN's board of directors claiming that the group and its subsidiaries were violating state employee tax law, obstructing justice and violating the Employee Retirement Security Act, according to subpoenas issued last month by the attorney general's office.

The subpoenas state 57 liens have been filed against ACORN and affiliates by the U.S. Treasury Department and the Internal Revenue Service for failure to properly pay withholding and unemployment taxes. The total amounts due were $1.12 million.

The Louisiana Department of Revenue also has filed two liens against ACORN for failure to pay withholding taxes, amounting to about $333,000.

Caldwell said the money for ACORN's state and federal withholding taxes "went somewhere, " and his office is trying to find out what happened.

ACORN officials in New Orleans could not be reached for comment Thursday.

Subpoenas issued

The subpoenas, issued in August to ACORN International in New Orleans and its bank, seek documents related to a wide range of financial records from 1998 to present, including employee wage income reports and internal memos. It also seeks documents related to Acorn International President Wade Rathke and his brother Dale Rathke, who kept the group's books.

Caldwell said ACORN officials are cooperating with the investigation.

In June, after a request by Jindal, Caldwell's office made inquiries into alleged embezzlement within ACORN 10 years ago. The group last year dealt with an internal dispute and a lawsuit involving accusations that Dale Rathke made nearly $1 million in improper credit card charges in 1999 and 2000. The brother and a donor repaid the money.

Caldwell said the statute of limitations presents obstacles to prosecutors taking action on the alleged embezzlement, and that his investigation is not focused on that issue.

Meanwhile, the ranking Republicans on two Homeland Security subcommittees have asked FEMA Administrator Craig Fugate to rescind a nearly $1 million grant to the ACORN Institute, a partner organization in New Orleans, to help low- and moderate-income families in 13 cities -- none in Louisiana.

The congressional barrage against ACORN came after the release last week of secretly recorded videotapes of ACORN employees offering business and tax advice to a young couple posing as a pimp and prostitute interested in setting up shop with underage girls.

The tapes were so sensational that Democrats, traditional ACORN supporters, have lined up with the Republican effort to cut off government financing for ACORN, at least pending further investigation.

"Recent evidence that ACORN helped actors posing as prostitutes cheat on taxes raises serious concerns about the organization's integrity, " Rep. Charlie Melancon, D-Napoleonville, said Thursday. "Taxpayer money shouldn't fund ACORN's inappropriate conduct, and a thorough investigation should be completed. That's why I voted today to stop federal funding for this organization."

House approves measure

In the House, 172 Democrats joined 173 Republicans in voting "yes" Thursday, while 75 Democrats voted "no."

"We're disappointed that the House took the rare and politically convenient step of attempting to eliminate federal funding for a single organization, one that has been the target of a multi-year political assault stemming variously from the Bush White House, Fox News and other conservative quarters, " said Bertha Lewis, the CEO of ACORN.

"Fortunately, ACORN derives most of its income from its members and other supporters, so the decision will have little impact on overall operations. The only real victims of today's vote are the families who have benefited from ACORN's important work."

In response to calls to rescind the fire prevention and safety grant, FEMA spokesman Clark Stevens said the agency "continually reviews all grants to ensure that they achieve their statutory goals and serve the public interest. If any grantee does not meet our accountability guidelines, they will no longer qualify for the grant."

Brennan Griffin, executive director of the ACORN Institute, said the group received a $450,484 fire prevention FEMA grant last year for a pilot program to help low- and moderate-income families in five cities: Providence, R.I.; Hartford, Conn.; Washington, D.C.; Albuquerque, N.M., and Wilmington, Del. The purpose, he said, was to "conduct in-home assessments of fire safety issues in the houses of low- and moderate-income families."

Grant money also provides smoke and carbon monoxide detectors, fire extinguishers, alarms designed for the hearing-impaired and children, and other fire safety equipment free to those who need them.

. . . . . . .

Jonathan Tilove can be reached at jtilove@timespicayune.com
Robert Travis Scott can be reached at rscott@timespicayune.com

http://www.nola.com/politics/index.ssf/ ... ut_of.html