Editor's Note: This story, revised on Nov. 23, 2009, originally contained the headline "ACORN Mismanaged $200,000 of DOJ Funding, Report Finds." The headline has been changed to clarify that ACORN was not accused by the Justice Department inspector general of mismanaging Justice Department grant money, but only of receiving money. The report found that one organization that claimed to use ACORN as a subagent in 2002 misused federal funds, however, the Department of Justice never determined in its inquiry how the $20,000 in grant money paid to the ACORN subagent was spent.
The community organizing group ACORN mismanaged about $200,000 received from the Justice Department, which failed to track how the allocated money was used, according to a report by the department's watchdog.
The news is the latest blow to a group whose public image has taken a beating in recent months after some of its employees were caught on video trying to help a couple posing as a prostitute and pimp evade tax laws.
"It's ironic that the Justice Department provided ACORN affiliates with funding to help prevent crime when many of ACORN's own employees have come under criticism for possible criminal conduct," said Rep. Lamar Smith, the top Republican on the Judiciary Committee.
Smith called on the inspectors general of federal agencies that have provided millions to ACORN to initiate similar investigations.
"The Justice Department's IG's report may prove to be just the tip of an iceberg-sized fraud," he said.
The report comes as ACORN is suing the federal government in attempt to regain the millions of dollars in funding Congress voted to block after the undercover videos were released in September. The suit charges Congress with violating the Constitution when it passed legislation in September that specifically targeted ACORN to lose federal housing, education and transportation funds.
ACORN claims it has been badly hurt by the congressional actions, and has had to fire workers and close some of its 1,200 branches around the country.
The DOJ report is unlikely to help.
The report targets five DOJ grants $200,000 and given to affiliates of ACORN since 2002. ACORN received an award of $20,000 this year; the ACORN Institute received two awards of DOJ grant funds -- one for $13,000 in 2007 and another for $8,500 this year; the American Institute for Social Justice received an award of $20,000 in 2002; the New York Agency for Community Affairs, Inc., received a $140,000 grant in 2005.
It is not clear how much of the money was spent because the DOJ did not conduct any audits, financial reviews or site visits of the five grants awarded to the ACORN affiliates, according to the report.
The American Institute for Social Justice received its $20,000 as part of a $3.1 million DOJ grant to the National Training and Information Center. But the contract identified "Toledo ACORN" as receiving the $20,000. A 2008 audit revealed significant irregularities in the training center's grant and serious flaws in the groups internal control system. That led to the group's executive director pleading guilty to intentionally misapplying federal funds and was sentenced to five months in prison. Of the 36 sub-recipients of National Training and Information Center's grant, Toledo ACORN was one of two not to respond to the department's inspector general.
During the same period, the DOJ rejected five applications for grants by ACORN affiliates, the report said.