Published November 09, 2010
While the rest of the nation was out voting last Tuesday, ACORN -- the major voter registration organization in cities and among the poor -- was quietly filing for bankruptcy in a Brooklyn, N.Y., courthouse a few blocks from its main office.
But despite the bankruptcy filing, many of the group's critics remain suspicious of the community organizers' intentions.
Court documents show that ACORN -- the Association of Community Organizations for Reform Now -- suffered a massive loss of public support over the past two years, and that the group and six affiliates now are more than $8.6 million in debt and have only $218,709 in cash.
According to the filings, ACORN took in $46.1 million in 2008. That dropped to $16.2 million last year, and contributions dwindled to just $1.57 million in the first 10 months of this year.
Because ACORN was incorporated as a private foundation, its funding sources have been wrapped in mystery. But this much is known: Its major backers have been labor unions, foundations and corporate philanthropies, as well as dues from members. Government grants are also part of the mix -- Republicans released figures late last year that showed ACORN received $31 million in federal funding in the past 10 years -- but those grants were hardly on the scale of donations from wealthy foundations like the $2.4 million from JPMorgan Chase or the $1.5 million from Citibank.
Last year Congress voted to defund the organization, which at one time boasted a membership of 400,000, with more than 1,200 neighborhood chapters in 75 cities.
ACORN's court filings show that the biggest loser in the bankruptcy was the New York realtor Forest City Ratner, which stands to lose a controversial, low-interest $1 million loan it made to ACORN.
The other big losers are 21 state governments across the country that are owed nearly $1.2 million in taxes, unemployment insurance, workers' compensation charges and other fees and taxes.
In a statement posted on ACORN's website, the group's CEO, Bertha Lewis, attributed the group's collapse to a “right wing onslaught" and the impact of hidden-camera videos that famously showed staffers offering advice to a conservative filmmaking couple posing as a prostitute and pimp. Lewis described those as "edited videos that misrepresented our mission, and consequently misled the public."
"The pressure and cost of defending ourselves in multiple investigations as a result of the falsified videos has eroded our organization. As a result we will be filing Chapter 7,” Lewis wrote.
But Bryan Rudnick of ACORN Watch, a political watchdog group, called the Chapter 7 bankruptcy “a shell game” and charged that ACORN was not disbanding, as the court records indicate, but simply “transforming” into a new entity.
“This is ACORN being ACORN,” he said. “Unlike most of us, ACORN doesn’t rely on computers, so it will be difficult to track what they are doing. They are very decentralized.”
Court records show that in the months leading up to the bankruptcy, the group sold “membership and e-mail contact lists as well as computers and furniture” to 16 different community organizations across the country, with such acronyms as OLE, MORE and ON. The biggest sale, for $20,000, went to Acorn Inc. in Manhattan. The smallest was for $410 by Organization United for Reform Washington (OUR).
Most of the groups have key officers who have worked for ACORN in the past.
Rudnick's charges were echoed by Roger Vadum, a critic who has tracked the groups for years. "Regardless of what happens in the bankruptcy case, ACORN will still exist, albeit in a different form," he said. And he called the bankruptcy filing an "exercise in public relations."
"In 14 states plus the District of Columbia, ACORN chapters have incorporated themselves under new names. In many cases the new groups are located in old ACORN offices and run by ACORN Leaders," he said.
The bankruptcy filings show that Forest City Ratner loaned ACORN $1 million in the midst of the realtor's effort to build a massive $4 billion project near downtown Brooklyn. The loan was agreed to in 2008 along with another $500,000 in grants that came as ACORN was reeling from public disclosures of operating irregularities and other problems in the organization.
Ironically, the funding pitted ACORN against local community activist organizations that were trying to stop the project, and the local groups were stunned when ACORN sided with the developer. In addition to the $1 million loan and the grant money, ACORN was given the power to sell “affordable” apartments built by the developer, sales that would have generated funds for ACORN.
Of the state governments affected in the bankruptcy filing, the biggest and most surprising debt was $750,000 owed to the Pennsylvania Bureau of Charitable Organizations.
According to Nils Frederiksen, spokesman for state Attorney General Tom Corbett, the news of the debt came as ACORN was about to face a hearing on Nov. 17 in which the attorney general is seeking to have documents and other records turned over to investigators looking into ACORN’s fundraising activities in Pennsylvania. ACORN has resisted the turnover.
Frederiksen said the timing of the bankruptcy filing not only raised questions, but the organization's claim that it might be liable for $750,000 was the first time that a figure had been placed on the group's fundraising in the state, because investigators haven’t had access to the records.
“It seems to be an acknowledgement that they raised $750,000 in Pennsylvania inappropriately,” the spokesman said.