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Acorn on Brink of Bankruptcy, Officials Say
By IAN URBINA
BALTIMORE — The community organizing group Acorn, battered politically from the right and suffering from mismanagement along with a severe loss of government and other funds, is on the verge of filing for bankruptcy, officials of the group said Friday.
Acorn is holding a teleconference this weekend to discuss plans for a bankruptcy filing, two officials of the group said. They asked not to be identified because they were not authorized to speak to the news media.
Over the last six months, at least 15 of the group’s 30 state chapters have disbanded and have no plans of re-forming, Acorn officials said. The California and New York chapters, two of the largest, have severed their ties to the national group and have independently reconstituted themselves with new names. Several other state groups are also re-forming outside the Acorn umbrella, and will not be affected if the national organization files for bankruptcy.
This week, the Maryland chapter announced that it would not reopen its offices, which were shuttered in September in the wake of a widely publicized series of video recordings made by two conservative activists, posing as a prostitute and a pimp, who secretly filmed Acorn workers providing them tax advice. In the videos, Acorn workers told one of the activists, James E. O’Keefe III, how to hide prostitution activities from the authorities and avoid taxes, raising no objections to his proposed criminal activities.
After the activists’ videos came to light and swiftly became fodder for 24-hour cable news coverage, private donations from foundations to Acorn all but evaporated and the federal government quickly distanced itself from the group.
The Census Bureau ended its partnership with the organization for this year’s census, the Internal Revenue Service dropped Acorn from its Voluntary Income Tax Assistance program, and Congress voted to cut off all grants to the group.
A network that once included more than 1,000 grass-roots groups, Acorn, which stands for Association of Community Organizations for Reform Now, was created in 1970 and has fought for liberal causes like raising the minimum wage, registering the poor to vote, stopping predatory lending and expanding affordable housing.
But long before the activist videos delivered what may become the final blow, the organization was dogged for years by financial problems and accusations of fraud. In the summer of 2008, infighting erupted over embezzlement of Acorn funds by the brother of the organization’s founder. Some chapters were also found to have submitted voter application forms with incorrect information on them during the lead-up to the 2008 presidential election, leading to blistering charges from conservative organizations linking Acorn’s errors to the Obama campaign.
“That 20-minute video ruined 40 years of good work,” said Sonja Merchant-Jones, former co-chairwoman of Acorn’s Maryland chapter. “But if the organization had confronted its own internal problems, it might not have been taken down so easily.”
The national organization’s housing affiliate, long one of the best-financed offshoots, has been hit especially hard. The group, which changed its name to the Affordable Housing Centers of America this year, now has 17 offices, down from 29 a year ago. The housing group’s annual budget has dropped to $6 million this year, down from $24 million last year.
Some of Acorn’s state chapters have tried to remake themselves in recent months.
Calls to Acorn’s New York City offices, for example, are now met with a recording that says: “Acorn is not providing services in New York. If you’re interested in hearing from local organizations with similar purposes, please press zero.”
The New York chapter has been replaced by a new group, called New York Communities for Change, whose Web site promotes many of Acorn’s goals and many of whose staff and community members are the same.
In Pittsburgh, Acorn officials said they were trying to continue work while they decided whether to stay with the national organization or form a new one. Maryellen Hayden, the volunteer director of Allegheny County’s Acorn, said the group was continuing to counsel people facing foreclosure and had recently sent two buses with dozens of members to Washington to rally for the Democratic health care bill.
Many former Acorn staff members and beneficiaries of its work say that while the group was its own worst enemy in many ways, it was also one of the most consistent advocates for the poor. Acorn’s sudden demise, supporters say, has left a vacuum in services for communities that used to rely on it for free advice on employment, tax and loan matters.
In Prince George’s County, Md., the Rev. Gloria Swieringa said she owed her home to Acorn. Ms. Swieringa, 72, who is blind, said her mortgage payment was $1,100 per month, more than she could afford on her fixed income of about $1,500 a month, until Acorn stepped in.
After she tried unsuccessfully to persuade her mortgage company to lower her rate or readjust her loan, Acorn workers began writing letters, making calls and contacting the news media on her behalf. Last May, the company relented and lowered her monthly payments to $771 per month.
“That’s what I know Acorn for,” Ms. Swieringa said. “And that’s why it’s just awful for it to disappear.”
But other supporters have grown disenchanted. Rick Tingling-Clemmons, 66, a teacher in Washington, was an enthusiastic dues-paying member, but soured on the organization over the reports of embezzlement and dropped his affiliation last year. By the time the scandal over the videotaped employees erupted, he was already done with Acorn, he said, and he now believes it needs to reinvent itself with a new mission and a new name.
“We get better, all of us, after we make mistakes that we learn from,” he said. “It’s from those mistakes that we learn and we get smarter. I think the people in Acorn will get smarter.”
Bertha Lewis, the chief executive of Acorn, said in an e-mail message that her organization’s problems were the result of “a series of well-orchestrated, relentless, well-funded right-wing attacks” reminiscent of the McCarthy era.
“Our effective work empowering African-American and low-income voters made us a target,” she said. “And the videos were a manufactured, sensational story that led to a rush to judgment and an unconstitutional act by Congress.”
In the month after the videos were released, Acorn commissioned an internal audit by a former attorney general of Massachusetts, Scott Harshbarger. His report, released in December, said the employees portrayed in the videos had not engaged in any illegal activity. Last month, the Brooklyn district attorney’s office completed an investigation of the Acorn employees there who appeared in the video and concluded that they had not taken part in any criminality.
Nonetheless, the damage had been done. Republicans and conservatives attacked the group, in part because the group’s registration efforts typically signed up voters who were believed to support Democrats. Those critics saw the videos as evidence of Acorn’s corruption.
Darrell Issa of California, the ranking Republican on the House Committee on Oversight and Government Reform, described Acorn at a December hearing as a “criminal organization” working hand-in-glove with the Obama administration. In February, committee Republicans released a report saying that Acorn “exploits the poor and vulnerable” for political gain.
A federal district court judge in New York ruled in December that the Congressional ban on funding for the group was unconstitutional. This month, the same judge barred federal officials from enforcing it, but no federal money is flowing to the organization while the government appeals the ruling.
In January, Mr. O’Keefe and three other men were arrested in New Orleans and accused of trying to tamper with the office telephone system of Senator Mary L. Landrieu, Democrat of Louisiana. [AGAIN the story gets the facts wrong!]
Mr. O’Keefe has denied the charges and said the group was trying to investigate complaints that constituents calling Ms. Landrieu’s office could not get through to criticize her support of a health care overhaul bill.
By IAN URBINA
BALTIMORE — The community organizing group Acorn, battered politically from the right and suffering from mismanagement along with a severe loss of government and other funds, is on the verge of filing for bankruptcy, officials of the group said Friday.
Acorn is holding a teleconference this weekend to discuss plans for a bankruptcy filing, two officials of the group said. They asked not to be identified because they were not authorized to speak to the news media.
Over the last six months, at least 15 of the group’s 30 state chapters have disbanded and have no plans of re-forming, Acorn officials said. The California and New York chapters, two of the largest, have severed their ties to the national group and have independently reconstituted themselves with new names. Several other state groups are also re-forming outside the Acorn umbrella, and will not be affected if the national organization files for bankruptcy.
This week, the Maryland chapter announced that it would not reopen its offices, which were shuttered in September in the wake of a widely publicized series of video recordings made by two conservative activists, posing as a prostitute and a pimp, who secretly filmed Acorn workers providing them tax advice. In the videos, Acorn workers told one of the activists, James E. O’Keefe III, how to hide prostitution activities from the authorities and avoid taxes, raising no objections to his proposed criminal activities.
After the activists’ videos came to light and swiftly became fodder for 24-hour cable news coverage, private donations from foundations to Acorn all but evaporated and the federal government quickly distanced itself from the group.
The Census Bureau ended its partnership with the organization for this year’s census, the Internal Revenue Service dropped Acorn from its Voluntary Income Tax Assistance program, and Congress voted to cut off all grants to the group.
A network that once included more than 1,000 grass-roots groups, Acorn, which stands for Association of Community Organizations for Reform Now, was created in 1970 and has fought for liberal causes like raising the minimum wage, registering the poor to vote, stopping predatory lending and expanding affordable housing.
But long before the activist videos delivered what may become the final blow, the organization was dogged for years by financial problems and accusations of fraud. In the summer of 2008, infighting erupted over embezzlement of Acorn funds by the brother of the organization’s founder. Some chapters were also found to have submitted voter application forms with incorrect information on them during the lead-up to the 2008 presidential election, leading to blistering charges from conservative organizations linking Acorn’s errors to the Obama campaign.
“That 20-minute video ruined 40 years of good work,” said Sonja Merchant-Jones, former co-chairwoman of Acorn’s Maryland chapter. “But if the organization had confronted its own internal problems, it might not have been taken down so easily.”
The national organization’s housing affiliate, long one of the best-financed offshoots, has been hit especially hard. The group, which changed its name to the Affordable Housing Centers of America this year, now has 17 offices, down from 29 a year ago. The housing group’s annual budget has dropped to $6 million this year, down from $24 million last year.
Some of Acorn’s state chapters have tried to remake themselves in recent months.
Calls to Acorn’s New York City offices, for example, are now met with a recording that says: “Acorn is not providing services in New York. If you’re interested in hearing from local organizations with similar purposes, please press zero.”
The New York chapter has been replaced by a new group, called New York Communities for Change, whose Web site promotes many of Acorn’s goals and many of whose staff and community members are the same.
In Pittsburgh, Acorn officials said they were trying to continue work while they decided whether to stay with the national organization or form a new one. Maryellen Hayden, the volunteer director of Allegheny County’s Acorn, said the group was continuing to counsel people facing foreclosure and had recently sent two buses with dozens of members to Washington to rally for the Democratic health care bill.
Many former Acorn staff members and beneficiaries of its work say that while the group was its own worst enemy in many ways, it was also one of the most consistent advocates for the poor. Acorn’s sudden demise, supporters say, has left a vacuum in services for communities that used to rely on it for free advice on employment, tax and loan matters.
In Prince George’s County, Md., the Rev. Gloria Swieringa said she owed her home to Acorn. Ms. Swieringa, 72, who is blind, said her mortgage payment was $1,100 per month, more than she could afford on her fixed income of about $1,500 a month, until Acorn stepped in.
After she tried unsuccessfully to persuade her mortgage company to lower her rate or readjust her loan, Acorn workers began writing letters, making calls and contacting the news media on her behalf. Last May, the company relented and lowered her monthly payments to $771 per month.
“That’s what I know Acorn for,” Ms. Swieringa said. “And that’s why it’s just awful for it to disappear.”
But other supporters have grown disenchanted. Rick Tingling-Clemmons, 66, a teacher in Washington, was an enthusiastic dues-paying member, but soured on the organization over the reports of embezzlement and dropped his affiliation last year. By the time the scandal over the videotaped employees erupted, he was already done with Acorn, he said, and he now believes it needs to reinvent itself with a new mission and a new name.
“We get better, all of us, after we make mistakes that we learn from,” he said. “It’s from those mistakes that we learn and we get smarter. I think the people in Acorn will get smarter.”
Bertha Lewis, the chief executive of Acorn, said in an e-mail message that her organization’s problems were the result of “a series of well-orchestrated, relentless, well-funded right-wing attacks” reminiscent of the McCarthy era.
“Our effective work empowering African-American and low-income voters made us a target,” she said. “And the videos were a manufactured, sensational story that led to a rush to judgment and an unconstitutional act by Congress.”
In the month after the videos were released, Acorn commissioned an internal audit by a former attorney general of Massachusetts, Scott Harshbarger. His report, released in December, said the employees portrayed in the videos had not engaged in any illegal activity. Last month, the Brooklyn district attorney’s office completed an investigation of the Acorn employees there who appeared in the video and concluded that they had not taken part in any criminality.
Nonetheless, the damage had been done. Republicans and conservatives attacked the group, in part because the group’s registration efforts typically signed up voters who were believed to support Democrats. Those critics saw the videos as evidence of Acorn’s corruption.
Darrell Issa of California, the ranking Republican on the House Committee on Oversight and Government Reform, described Acorn at a December hearing as a “criminal organization” working hand-in-glove with the Obama administration. In February, committee Republicans released a report saying that Acorn “exploits the poor and vulnerable” for political gain.
A federal district court judge in New York ruled in December that the Congressional ban on funding for the group was unconstitutional. This month, the same judge barred federal officials from enforcing it, but no federal money is flowing to the organization while the government appeals the ruling.
In January, Mr. O’Keefe and three other men were arrested in New Orleans and accused of trying to tamper with the office telephone system of Senator Mary L. Landrieu, Democrat of Louisiana. [AGAIN the story gets the facts wrong!]
Mr. O’Keefe has denied the charges and said the group was trying to investigate complaints that constituents calling Ms. Landrieu’s office could not get through to criticize her support of a health care overhaul bill.
