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ACORN Announces Reforms After 'Pimp,' 'Prostitute' Videos

ACORN said Wednesday it will stop any "new intakes" — essentially closing its doors to new clients — until it completes an internal investigation prompted by the release of four hidden-camera videos that show workers advising a fake pimp and prostitute to lie to get loans for a brothel.

"As a result of the indefensible action of a handful of our employees, I am, in consultation with ACORN's Executive Committee, immediately ordering a halt to any new intakes into ACORN's service programs until completion of an independent review," ACORN CEO Bertha Lewis said in a statement released Wednesday.

"I have also communicated with ACORN's independent Advisory Council, and they will assist ACORN in naming an independent auditor and investigator to conduct a thorough review of all of the organizations relevant systems and processes."

Lewis said an independent auditor will be named no later than Friday and will make recommendations directly to her, as well as the full ACORN board.

"We enter this process with a commitment that all recommendations will be implemented," Lewis' statement continued.

The growing scandal drew criticism from the Obama administration on Wednesday as White House Press Secretary Robert Gibbs called the conduct depicted on the four videos "completely unacceptable."

"The administration takes the accountability very seriously," Gibbs told reporters.

Elsewhere, Minnesota Gov. Tim Pawlenty sent a letter on Wednesday to the state's Management and Budget Commissioner directing him to stop all state funding to ACORN unless the state is legally obligated to provide such funding. Pawlenty, a Republican, also directed Commissioner Tom Hanson to conduct a thorough review of the state's relationship with ACORN.

Undercover videos shot by independent filmmaker James O'Keefe and partner Hannah Giles at ACORN offices in Washington, D.C., Baltimore, Brooklyn, N.Y., and San Bernadino, Calif. led to the firing of four employees and the launch of a criminal investigation by the Brooklyn District Attorney's Office.

VIDEO: Shocking revelations from ACORN worker in California

The U.S. Census Bureau severed ties with the group last week in the wake of the controversy, and the Senate voted 83-7 on Monday to block the Department of Housing and Urban Development from giving grants to ACORN, meaning the organization will not be able to win HUD grants for programs such as counseling low-income people on how to get mortgages and for fair housing education and outreach.

"We have all been deeply disturbed by what we've seen in some of these videos," Lewis said in her statement. "I must say, on behalf of ACORN's Board and our Advisory Council, that we will go to whatever lengths necessary to reestablish the public trust. For nearly forty years, ACORN has given voice to communities, and gotten results. Right now, our nearly 500,000 members are working their hearts out for quality, affordable healthcare for every American and to help stop the foreclosure crisis. We must get this process right, so the good work can go forward."

The fourth video by O'Keefe and Giles, which first appeared on BigGovernment.com, surfaced Tuesday, depicting an ACORN staffer in San Bernardino assisting the pair in their quest to obtain housing for an illegal sex business.

Much like in their previous undercover stings, O'Keefe, 25, and Giles, 20, who posed as a prostitute named "Eden," were given assistance on Aug. 17 from a staffer at the ACORN office on how to avoid detection by law enforcement. The couple even tell ACORN staffer Tresa Kaelke — who admits on the videotape to previously having sex for money — that they plan on bringing in 12 girls from El Salvador to work in a home they hope to acquire via the community organization.

"We're bringing these girls from overseas, but we are going to take a cut of the profit and intend to use the profit from the tricks the girls perform to fund my political campaign and the advertising," O'Keefe tells Kaelke, adding that it will fund at least 50 percent of his planned run as a Democratic congressional candidate.

Kaelke, who told the couple that she once worked as a paid escort, at one point admits she was unqualified to counsel but stops well short of reporting O'Keefe and Giles to authorities.

"You know you are breaking the law if you have these girls in your care and they're minors," Kaelke said on the videotape, which was provided by O'Keefe and can be viewed on BigGovernment.com. " … If I didn't know better, and I don't, but I would think this is a total setup."

ACORN issued a statement late Tueday saying that Kaelke, indeed, suspected she was being set up and only responded as she did to play along with the obviously fake pimp and prostitute.

"She matched their false scenario with her own false scenarios," ACORN said in a statement, adding that Kaelke thought O'Keefe and Giles were not believable.

“Somewhat entertaining, but they weren't even good actors. I didn’t know what to make of them," Kaelke said, according to ACORN's statement. "They were clearly playing with me. I decided to shock them as much as they were shocking me ... saying the most outrageous things with a straight face.”

Among the "outrageous things" she told them was that she previously worked as a "paid escort" in the Bahamas.

"We did trips to the Bahamas for big businessman on yachts," she says in the video. "It was absolutely individual preference, you didn't have to [have sex] … I was the one who did the bookings. I had sex one time because I wanted to."

In an earlier statement released on Saturday, Lewis said that while she could not defend the actions of the terminated workers, O'Keefe may have committed a felony during the sting operation. She also threatened legal action against FOX News, which has aired the videos.

"It is clear that the videos are doctored, edited, and in no way the result of the fabricated story being portrayed by conservative activist 'filmmaker' O'Keefe and his partner in crime," Lewis said. "And, in fact, a crime it was — our lawyers believe a felony — and we will be taking legal action against Fox and their co-conspirators," she said.

O'Keefe, meanwhile, told FOX News he wants an apology from media outlets "covering for ACORN" and the organization itself.

"They don't have any leg to stand on, so they're saying I dubbed in my voice, which is completely absurd," he said. "When the truth comes out in the end, they're going to be apologizing to us."

O'Keefe said he was merely trying to hold the ACORN offices accountable.