ACORN Whitewash: What ACORN Won't Tell You About the 'Audit' it Bought

On September 16, 2009, with much fanfare, ACORN CEO Bertha Lewis announced that ACORN was hiring an independent auditor to review its internal processes. Yesterday, the former Massachusetts Attorney General Scott Harshbarger produced a report finding ACORN, as a corporation, engaged in administrative negligence.

This of course has not stopped ACORN from declaring victory and calling the report a vindication. Is anyone surprised that a report paid for by ACORN exonerates them? The fact that this review didn’t even include an audit of ACORN’s financial statements speaks volumes. Luckily for taxpayers, there are numerous federal and state investigations currently underway that should ultimately produce a legitimate finding regarding ACORN’s illegal activities.

The reality is ACORN has masqueraded as charitable organization in order to fund and advance a partisan political agenda. There is no mechanism in place to follow where the use of taxpayer and charitable dollars end and where funds used to pay for their political activities begin.

Despite these findings of obvious negligence on ACORN’s behalf, the Proskauer Rose report was not an audit. In fact, among the “7,000 pages” (19) Mr. Harshbarger reviewed, none of those pages included:

• The financial statements audited by ACORN’s CPA, William G. Stamm, of Hrapman Duplantier LLP,
• The bank and accounting statements of ACORN’s bank, Whitney Bank, located in New Orleans,
• The findings released by the Louisiana Department of Justice on ACORN’s mismanagement, and
• A Congressional Report issued by the minority staff of the Committee on Oversight and Government Reform (“The ACORN Report”), which reviewed ACORN’s financial mismanagement and formed the basis of Congressional actions taken against ACORN.

Moreover, there are a number of problems with Mr. Harshbarger’s report:

• The report claims, “Three of the six videos – Brooklyn, Los Angeles, and Washington, D.C. – involved only ACORN Housing employees, over which ACORN has no control.” (12). However, the ACORN Report, cited above, shows that ACORN owns and controls the ACORN Housing Corporation, which, while holding its principal place of business in Chicago, is incorporated in Louisiana and has its employees and staff paid through ACORN’s coffers.

• Additionally, it seems counter-intuitive for Mr. Harshbarger to have reviewed a document, cited in his report titled “ACORN Housing Quality Review Master” (27), if ACORN Housing was truly “separate and independent” from ACORN, the client who paid Proskauer Rose to review it.

• The Proskauer Rose report claimed, “ACORN should develop a simplified national organization and board structure consisting of just two entities – a 501(c)(3) for charitable, non-profit fundraising, advocacy and education with a majority of independent members, and a 501(c)(4) for support of ACORN community organization and political activity, with at least one-third independent members.” (15) This recommendation is misleading as well. Nowhere in Mr. Harshbarger’s report did he mention that ACORN owns and controls a number of 527 political action committees: ACORN PAC, Communities Voting Together, and ACORN Votes. Either Mr. Harshbarger is suggesting that ACORN engage in illegal activities by using its 501(c) (4) to campaign for the election of Democratic candidates, or Mr. Harshbarger is expressing his profound ignorance and a lack of professional due diligence because the Association of Community Organizations for Reform Now (“ACORN”) has never been tax-exempt, but a taxable state-registered corporation filing IRS FORM 1120 for corporate income taxes.

At a joint Oversight-Judiciary Committee forum last week, we heard from state government officials and an ACORN whistleblower about the fraudulent and deceptive tactics ACORN uses to manipulate the same people it purports to serve. The more we have learned about the inner-working of ACORN and its affiliates, the more apparent it becomes that this organization is intentionally structured to deceive and mislead the American people.”