Obama ignores Congress and pays off his buddies

VADUM: Obama uses taxpayer cash to back ACORN Name changes used to dodge the law

By Matthew Vadum

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The Washington Times

Monday, November 28, 2011

Illustration: ACORN’s new name by Greg Groesch for The Washington Times

The Obama administration has showered its allies at ACORN Housing with $729,849 so far this year despite powerful, newly unveiled evidence of corruption and massive accounting irregularities at the longtime affiliate of ACORN (Association of Community Organizations for Reform Now).

Watchdog group Cause of Action recently pressured NeighborWorks America, a taxpayer-funded federal nonprofit that funneled more than $26.5 million in federal foreclosure-avoidance money to ACORN Housing, to disclose an internal audit furnished to then-Senate Banking Committee Chairman Christopher Dodd, Connecticut Democrat, late last year.

The audit, provided to Cause of Action last month, found that although ACORN Housing and voter-fraud-prone ACORN are legally separate entities, there were numerous financial transactions and "evidence [of] extensive relationships between both organizations that may undermine claims of an 'arm's length relationship' between them." ACORN Housing, the audit states, worked closely with ACORN and even subcontracted some of the counseling work to "four ACORN local state chapters."

It's still the same old ACORN, the same old venal organization. But none of this seemed to bother the Obama administration when it started cutting new checks to its old community organizing friends earlier this year.

ACORN Housing was incapable of administering the federal funds properly, the audit suggests. "We have determined that [ACORN Housing] lacks the accounting capacity to manage the size and complexity of the [foreclosure-avoidance] program funds," said the audit, dated Dec. 17, 2010. ACORN Housing had poorly trained staff, extraordinarily sloppy accounting procedures, and violated conflict-of-interest guidelines laid down by the Office of Management and Budget (OMB), the audit said.

ACORN Housing is the largest affiliate of ACORN, the notorious group brought down by undercover videos showing its employees facilitating child prostitution in 2009. ACORN Housing changed its name a year ago to Affordable Housing Centers of America (AHCOA) to escape the stigma of being associated with ACORN, the famously corrupt former employer and legal client of President Obama. ACORN's state chapters have restructured themselves and now go by names such as New York Communities for Change and Alliance of Californians for Community Empowerment, both of which have been heavily involved in organizing and financing the Occupy Wall Street movement.

Despite ACORN Housing's public posturing, there has never been a wall of separation between ACORN, the shell corporation that filed for bankruptcy on Election Day 2010, ACORN Housing and ACORN's 370-plus affiliates. In fact, ACORN and ACORN Housing shared the same office space across America in 2009 when James O'Keefe and Hannah Giles conducted their devastating video investigations.

ACORN itself is a nonprofit version of Enron, the infamous failed energy company that imploded under the pressure of hopelessly confusing, misleading and illegal accounting practices. The ACORN network has developed a tangled, deliberately complex mess of interlocking directorates and affiliated tax-exempt groups that routinely swap seven-figure checks and that has long cried out for a probe under federal racketeering laws.

Although ACORN and ACORN Housing are legally separate corporate entities, in practice they have been virtually indistinguishable. ACORN Housing's board is controlled by veteran ACORN activists, such as the corporation's president, Alton L. Bennett (active with ACORN since at least 1991) and Dorothy Amadi (active with ACORN since at least 1989). As before the name change, Mike Shea remains in charge of ACORN Housing's day-to-day operations as its executive director.

The U.S. Department of Housing and Urban Development (HUD), headed by longtime ACORN ally Shaun Donovan, gave $79,819 to AHCOA Miami on March 1, $300,000 to AHCOA on Aug. 11, and $350,030 to AHCOA Philadelphia on Sept. 2. No doubt, more grants are in the pipeline.

The Obama administration gave the grants to ACORN Housing based on a thinly reasoned legal opinion in which a government lawyer waxed philosophical on all the possible meanings of the word "affiliate" found in "Black's Law Dictionary." In September 2010, the lawyer accepted at face value ACORN Housing's claim it broke with ACORN without even considering the history of the ACORN network. Conveniently, the legal opinion became final in September 2011, a month before the audit became available.

The opinion allowed the administration to get around the ban on federal funding of ACORN that became law at the end of 2009.

While Dan Epstein, Cause of Action's executive director, applauded NeighborWorks for "publicly releasing a detailed federal audit revealing affiliation between ACORN and AHCOA," he said he "would look forward to GAO's explaining why it favored a dictionary definition over NeighborWorks' accounting and audit findings in assessing the relationships between ACORN's rebranded entities."

To add insult to injury, as of July, ACORN Housing and its subsidiaries owed $162,813 in back taxes, according to public records. The money is owed to the Internal Revenue Service, 11 states, the city of Philadelphia and two California counties. AHCOA in San Antonio, Texas, will receive an undisclosed percentage of a $619,696 federal foreclosure-avoidance grant as a subgrant.

Meanwhile, Bruce Dorpalen, public affairs director for AHCOA, is now lobbying Congress, asking it to provide $60 million for HUD housing counseling programs.

Whether that new taxpayer money will find its way into ACORN's political operations or voter fraud operations is an open question.