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Transcript: Bertha Lewis and Rep. Issa on 'FNS'

The following is a rush transcript of the September 20, 2009, edition of "FOX News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: As you may have heard by now, President Obama decided to do five Sunday shows today, but the White House made it clear they had no interest in talking to us. We'll have more on that later.

But first, the nation's biggest community organizing group, known as ACORN, was caught in a hidden camera sting, then saw both houses of Congress vote to cut federal funding.

We're joined today by ACORN's CEO, Bertha Lewis, and by one of its toughest critics, Congressman Darrell Issa.

And we welcome both of you to "FOX News Sunday."

BERTHA LEWIS, ACORN CEO: Thank you, Chris.

REP. DARRELL ISSA, R-CALIF.: Thank you, Chris.

WALLACE: Ms. Lewis, when those videos of ACORN workers who were helping what they thought were a pimp and a prostitute first came out, you said the following — and let's put it up: "We are their Willie Horton for 2009. We are the bogeyman for the right wing and its echo chamber."

Now the vast majority of Democrats in the House and the Senate have voted to cut funding for ACORN. Can you still say this is just about race and politics?

LEWIS: Well, we are the largest community organization of low- and moderate-income folks and mostly people of color. And of course, any organization is not entirely perfect.

I think Congress, you know, will be looking at doing an anti-ACORN amendment and just singling out one organization, but we continue to make sure that all of our employees — if they're too stupid to understand that they are not reaching professional standards, we terminate them.

And we actually make sure that, you know, what we do internally is serving our constituents: 500,000 poor black and brown, Asian and white people in this country. So I was outraged by it. Everyone should be. And I can understand how the Congress was also.

WALLACE: Well, Congressman Issa, it's not just the videos. In July the Republican staff, your staff on the Government Oversight and — or, rather, the House Committee on Oversight and Government Reforms, issued an 88-page report in which you charge the following: "Acorn has committed investment fraud, deprived the public of its right to honest services, and engaged in a racketeering enterprise affecting interstate commerce."

Briefly, explain why you think ACORN is a criminal organization.

ISSA: Well, one thing they did was they covered up an embezzlement, both internally and externally, and then glossed over the dollars, and the...

WALLACE: This was an embezzlement by the brother of the founder back in 1999 and 2000 of almost a million dollars.

ISSA: Of almost a million dollars.

Basically, the founder stayed on the board until this became public eight years later. Now he's with affiliates doing the same work and able to say well, he's not with the company.

The bottom line is there's no transparency in ACORN. Any charity that you would look at — and we've looked at them in our committee. It's a regular part of what we do. You normally find out who's paid what, where the money goes, what the collection costs are and so on.

Here we have literally hundreds of organizations tied under the ACORN umbrella, and you can't even find out what their incorporation is, whether they pay taxes, who makes what or, more importantly, whether corporations within the affiliates work in different areas — political fundraising, getting candidates elected, voter registration, other community activities, whether or not those moneys are fungibly moved illegally.

WALLACE: That brings up, Ms. Lewis, the question I got most from our viewers in e-mail after we announced that you were going to be on the program, which was how can a nonprofit engage in political activity?

It turns out that ACORN, the parent group, is not a 501(c)(4), which would be tax exempt, but rather a taxable nonprofit. The Congressional Research Service says that you are the only taxable nonprofit that they could find in this entire country.

Is that so that your various subsidiaries can get federal funds and act as nonprofits, while your parent group can engage in political activity?

LEWIS: We've made sure since I've become the CEO that affiliates have firewalls between them. I know that back last year we were outraged that the board didn't know about the previous chief organizer's activities.

I've completely overhauled all of our finances, all of our controls. And he was fired immediately, just as in this instance with these tapes we terminated folks immediately.

Under my watch and my leadership, I will make sure that we keep saving people's homes, making sure that people get paid good wages...

WALLACE: But — but...

LEWIS: ... and making sure that our corporate structure is aboveboard, it is open. The "R" in ACORN stands for reform. And not only do we think we want to reform public policy, but internally let's have some reform.

WALLACE: But — but, Ms. Lewis, if you're so concerned about serving the community, obviously being a taxable nonprofit means that you have to pay taxes.

LEWIS: Taxes, absolutely.

WALLACE: If you're so concerned about serving the community, why not be a tax-exempt nonprofit, stay out of politics, and then you could give that money — instead of to the federal government, you could give it to your community?

LEWIS: I think what you would also agree with is the right of the people to come together not only to petition their government — they have the right to do that. Poor people have the right to do that.

But you also need to be able to do lawful (c)(3) activities such as servicing the community, which we do. I think an organization can do both. Hundreds of organizations do the same thing that we do. We make sure that we service our 500,000 members.

WALLACE: Congressman Issa?

ISSA: But you know, in fairness, Bertha, I don't know of another organization structured the way you are where they're both a political wing, if you will, of the Democratic Party, and has close relations with the unions, and takes federal dollars, and takes charity money, and does not disclose in a way in which anybody — your donors, the government when they provide money — can actually get transparency.

If you're going to change this, will you come before Chairman Towns, a man who, by the way, voted not to cut off your funding, and get — and give the kind of disclosure to where the Government Oversight and Reform Committee can know that you are doing work with firewalls, as you say, so the American people know that their dollars don't end up doing political activities prohibited by law?

LEWIS: Here's the question that we really should be asking.

WALLACE: Well, no, no. Answer his question, if you will.

LEWIS: The question that we really should be answering — you have an organization such as ours that absolutely pays its taxes and absolutely provides its services. It has firewalls up. We think it's up to the Congress to determine how they would handle some sort of anti-ACORN program or amendment.

There are poor people in this country every day that we're saving their homes, making sure that they have decent wages...

WALLACE: But why not go...

LEWIS: And so that is what...

WALLACE: I mean, could you answer...

LEWIS: So I think...

WALLACE: ... could you answer the congressman's...

LEWIS: ... it's not up to us. My job — my job is to serve our 500,000 members. My job...

WALLACE: Ms. Lewis, could you answer the question directly?

LEWIS: And that...

WALLACE: Why not go...

LEWIS: And that's what we're going to do.

WALLACE: ... why not go before the committee? We've spoken about...

LEWIS: I have gone...

WALLACE: Please let me ask the question.

LEWIS: OK.

WALLACE: Congressman Towns, who's a Democrat — it is a Democratic- controlled committee, but there obviously are Republicans like the ranking Republican, Congressman Issa — are saying come before us and explain, because it seems you're merging charity, nonprofit, profit, political, non- political, and that it all gets jumbled up and you don't know which dollar is going where.

LEWIS: Well, that's Congressman Issa's opinion. Again, what — anyone that asks us to come — we will do whatever we need to do to make sure that folks understand the work that we actually do and that we've been doing for 40 years...

ISSA: Bertha, but...

LEWIS: ... that we've been doing and we've been doing it well.

ISSA: ... Chris is asking a question. You're giving an answer that your own counsel, Kingsley, said is not true. You don't have firewalls. That's an internal memo that your counsel is saying you have these problems.

And if you had those problems then, and for 40 years have had these problems, and the American people have put $53 million into your organization and countless other dollars of other state, local and charity money, the question is will you allow, at least looking back, a review of these things so that people can have a confidence that you have those in?

There is no God-given right for any organization to receive a grant from the American people. The fact is there are organizations standing in line that wish they won instead of you, and they're giving us the transparency so we can have the confidence the money is spent only for the purpose of the grant.

LEWIS: Congressman Issa is right. You have competitive grants and you need to compete with a lot of other folks. You need to deliver those services. He's absolutely right.

He's absolutely right that his staff, who repeatedly talked to the lawyers at Harmon Curran that said we did an internal — a lawyer kind of privileged confidential document. They gave advice. Since I took over, I have overhauled the entire system.

WALLACE: Well, wait, wait, wait. Wait. Wait.

LEWIS: And we took our advice.

WALLACE: Wait.

LEWIS: And that's what we're doing.

WALLACE: You say that you overhauled...

LEWIS: And we're making...

(CROSSTALK)

WALLACE: You say you overhauled the whole system.

LEWIS: Yes.

WALLACE: There are the videos which have happened on your watch.

LEWIS: Yes.

WALLACE: I just want to put up — there are ACORN workers...

LEWIS: That's right.

WALLACE: ... advising young men and women posing as a pimp and a prostitute how to buy a house and avoid paying taxes. Here it is:

(BEGIN VIDEO CLIP)

(UNKNOWN): Your business is a performing artist.

(UNKNOWN): A performing artist.

(UNKNOWN): Which you are, OK?

(UNKNOWN): OK.

(UNKNOWN): So you're not lying.

(UNKNOWN): It's kind of a (inaudible) ego.

(UNKNOWN): It's a little play on words. But you're a performing artist.

(UNKNOWN): Yeah.

(UNKNOWN): All right.

(UNKNOWN): OK? So stop saying prostitute.

(UNKNOWN): Got it.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

(UNKNOWN): Day one, you earn X amount of dollars, find another name.

(UNKNOWN): Find another — another name for...

(UNKNOWN): And don't say that you're — you're a prostitute thing or whatever.

(END VIDEO CLIP)

WALLACE: I want to point out, because you've also attacked FOX, FOX did not produce, did not make, did not buy those videos. We've just put them on the air like everybody else now has. You were brought in a year ago to clean up ACORN. Is this the new and improved ACORN?

LEWIS: Well, what did I do? Immediately these folks were terminated. Immediately...

WALLACE: Well, actually, first you attacked us and said it was a...

LEWIS: Immediate — no.

WALLACE: ... it was a political and a racial conspiracy.

LEWIS: They were terminated immediately. I know the sequence. Those folks were terminated immediately. And what did I also do? Make sure that we have an independent review, make sure that we suspended any walk-in activities so we could review what worked, what didn't work.

In instances those folks were thrown out. I have an obligation to my board, to my members and to my other employees that actually did practice professional, good high standards. Those folks cannot work for me.

WALLACE: But why is it still going on a year after you took office?

LEWIS: Well, here's the thing. I — as I said, the first thing that we began to do was reorganize our board, make sure that we had financial structures and controls, make sure the way our offices were managed — and in a — in a way, it's indefensible what I saw there.

That is why I said, "You know what? We're going to terminate these folks immediately," even though I've been reviewing things and making sure that we look at an organization that has...

WALLACE: Now...

LEWIS: ... 71 sites. In a way, this was good for us, so what it did was show up to us what weaknesses we have, and we have moved swiftly...

WALLACE: ACORN...

LEWIS: ... in order to correct that.

WALLACE: ACORN has long ties to Barack Obama. He's done work over the years for various organizations.

LEWIS: Well, you say that there's long ties.

(CROSSTALK)

LEWIS: That's a matter of opinion.

ISSA: He was an attorney for ACORN on a couple of occasions, at a minimum.

WALLACE: You personally endorsed Barack Obama last year in a speech before ACORN. Do you hope that he will veto any measure that comes out of Congress cutting off ACORN funds?

LEWIS: First of all, President Obama was a young lawyer among many different lawyers that represented a whole host of...

WALLACE: Can I get an answer to my...

LEWIS: ... organizations, just not us.

WALLACE: Ms. Lewis, can I get an answer to my question?

LEWIS: Here's what we want. President Obama is a very smart, very thoughtful person. What he does is his decision. I would never presume to tell the president whether he should veto a bill or not.

WALLACE: He says that he believes that ACORN should be investigated.

LEWIS: Well, that's his opinion also.

ISSA: Well, it's also Chairman John Conyers' opinion, and he's asked his subcommittee ranking — Chairman Nadler to pursue that. And again, this is not Republicans. This is about all the corporate structure, whether things have been violated.

You know, if you want to have an independent investigation — and I've heard that expression used by Bertha many times — you go to Pricewaterhouse or Ernst & Young and you — you walk in and say, "I want an audit of our corporations. I want a — and when we get done with it, make it public."

WALLACE: Let me — let me interrupt — let me interrupt you, if I may, because you said this last week that you would name an independent auditor by Friday to review ACORN. I looked at your Web site 20 minutes ago. There's still not a word.

LEWIS: You will have that announcement on Monday, making sure that when we hit the ground running that everything is in place, because it is important that we continue...

WALLACE: Is it going to be somebody...

LEWIS: ... to do that.

WALLACE: ... independent like Pricewaterhouse? Is it — I mean, you're naming the auditors...

LEWIS: Well, it's not going to be...

WALLACE: ... so some people are going to...

LEWIS: ... Pricewaterhouse.

WALLACE: ... wonder whether or not...

LEWIS: You'll find out who that person is, and you'll also note that we brought in things last year, new auditors, new financial professionals, to make sure that they gave us sound advice, which I've been implementing, as well as making sure that what you just saw never, ever happens again.

ISSA: Bertha, if I could ask just one question from the standpoint of the government.

WALLACE: We're almost out of time.

ISSA: Before we — before we provide additional grants or make you eligible for additional grants, wouldn't it be fair for you to demonstrate to the federal government, to the agencies, that, in fact, you now have those separations, so that whether it's Pricewaterhouse or somebody else, will you assure us that that's the case?

Because my opinion continues to be you shouldn't get another penny of federal dollars until you demonstrate that those dollars are firewalled for only that use, and that has not been the history of the organization.

LEWIS: And I'm glad Congressman Issa said that is his opinion.

WALLACE: Are you willing to open your books up to...

LEWIS: I am willing to do the work that I need to do every single day, not be distracted, make sure that things that we do well we beef up, and things that we don't do so well that we change and we reform.

I have to work for poor people. I have to make sure I'm saving people's homes. I have to make sure that children don't get lead poisoning. That's my job.

WALLACE: Ms. Lewis...

LEWIS: That's what I'm going to do.

WALLACE: ... Congressman Issa, I want to thank you both.

ISSA: Thank you, Chris.

WALLACE: I want to thank you both for coming in and answering all of our questions.

LEWIS: Thank you.

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