ACORN files for chapter 7 bankruptcy — and blames (or credits?) ‘right-wing media’ for downfall

Matthew Vadum Senior Vice President, Capital Research Center
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Bertha Lewis, the potty-mouthed chief organizer of the Association of Community Organizations for Reform Now (ACORN) announced today that her group has filed a Chapter 7 bankruptcy petition.

Chapter 7 of the U.S. Bankruptcy Code provides for the liquidation of the estate of an indebted individual or corporate entity. This is different from Chapter 11 which often provides debtors with temporary protection from their creditors while they reorganize their affairs.

Despite the group’s exhaustively documented 40-year track record of corruption and lawbreaking, Lewis blamed the demise of the organization on its conservative critics.

In a statement posted on the group’s website, Lewis claimed ACORN was the victim of its own “highly effective strategies” that succeeded in “catching the attention of right-wing media and its proponents.”

ACORN was subjected to a “barrage of unmitigated accusations,” but even as the “extremists” attacking it “increased their radicalism, we continued to make a difference for families in each and every corner of our nation.”

To Lewis, conservatives are living embodiments of pure evil. In a convoluted speech earlier this year to a Young Democratic Socialists meeting, she called the Tea Party a “bowel movement” and seemed to suggest a violent race war was in America’s future.

Hours after ACORN announced its bankruptcy filing today, former ACORN national board member Marcel Reid said that ACORN leaders only have themselves to blame. Reid was also the final chairwoman of ACORN’s Washington, D.C. chapter.

“So sorry to hear ACORN’s national board allowed this to happen through their negligence,” she said. “When they had an opportunity to purge or return ACORN to its core mission of people helping people, they failed to do so.”

As I wrote in a report this month for my employer, Capital Research Center, ACORN experienced its share of highly public debacles in the last two years. In 2008 it was revealed that founder Wade Rathke’s younger brother Dale, ACORN’s chief financial officer, had embezzled nearly $1 million from the group around the year 2000. The Rathkes and senior ACORN management kept the theft secret until it broke out into the open in mid-2008.

Drummond Pike, founder of the ultra-radical Tides Foundation, a pass-through entity that distributes wealthy donors’ grants anonymously, swooped in to pay off the younger Rathke’s remaining restitution payments in order to conceal the names of Tides donors. Rathke claims he resigned as chief organizer but ACORN national board minutes indicate he was dismissed. The embezzlement led many large charities such as the radical left-wing Catholic Campaign for Human Development (CCHD) to stop funding the group.

Then last year two conservative activists posed as a pimp and prostitute seeking legal and financial assistance to open a brothel for pedophiles. They claimed to want ACORN’s help to obtain loans for an establishment that they said would have employed underage girls from El Salvador.

In almost every city where the duo presented the fictional scenario, ACORN workers unblinkingly offered their assistance. One counseled the couple to bury cash in a tin can to keep it from the prying eyes of the IRS. Another told the pretend prostitute to indicate on a government form that she was part of the entertainment industry.

This ignited a firestorm in Congress that led to a now-expired ban on federal funding of the group. The IRS kicked ACORN out its tax preparation program and the Census Bureau barred the group from participating in this year’s once-a-decade head count. Even longtime ACORN allies including House Financial Services Committee chairman Barney Frank, Massachusetts Democrat, denounced the group.

Regardless of what happens in the bankruptcy case, ACORN will still exist, albeit in a different form.

Its legally separate voter mobilization division, Project Vote, which used to employ President Obama, remains open for business and continues to be located in ACORN’s office in the nation’s capital. Project Vote’s current voter drive is being run by ACORN executive Amy Busefink, who goes on trial in four weeks in Las Vegas for conspiracy to commit voter registration fraud. ACORN itself is also a defendant in the criminal case. ACORN Housing still operates. It changed its name to Affordable Housing Centers of America.

The evidence strongly suggests ACORN’s bankruptcy proceeding is an exercise in public relations, rather than a genuine winding down of the group’s affairs. 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.

According to investigators for the House Oversight and Government Reform Committee, Lewis has been busy this year hoarding ACORN’s remaining assets. Investigators believe the group has about $20 million in cash spread out over 800 bank accounts and that ACORN affiliates hold $10 million in property.

In his book, “Seeds of Change: The Story of ACORN, America’s Most Controversial Antipoverty Community Organizing Group,” published months ago by Vanderbilt University Press, ACORN historian John Atlas said ACORN plans to resurface under a new name after the 2010 elections.

One new institution tentatively called the Community Action Support Center will be created “to provide a range of training, technical assistance, and oversight services to the new community organizations.” ACORN’s Brian Kettenring will be interim executive director. Lewis plans to create a Black Leadership Institute. ACORN executive director Steve Kest, who recently joined Van Jones as a “senior fellow” at the left-wing Center for American Progress, quit ACORN “but will work with the new community groups in a consulting and voluntary capacity.”

“The emerging community organizations will retain ACORN’s commitment to building national power, and are beginning discussions toward a process to federate at some later date, presumably after the 2010 elections or in 2011,” Atlas writes. ACORN leaders are working on “voter engagement activities.” They intend “to engage the surge voters of 2008 and turn them into permanent voters in 2010 and beyond.”

ACORN executive Nathan Henderson-James made similar statements in a leaked e-mail.

ACORN will be back. In fact, it never actually went anywhere.