There is some confusion over the story about ACORN “changing its name” that needs to be cleared up and given context. Getting it right is important.
The link was a sidebar to my main story, but I should have spelled out the facts on the name change more clearly, and so should everyone who has mischaracterized the story and glossed over the real reason for the name change:
ACORN hasn’t changed its name. ACORN International has.
What’s missing in soundbite-length TV coverage of the story is the fundamental distinction between ACORN and ACORN International, and why it matters.
They are two separate entities — and there is considerable tension between them. It’s confusing because, of course, ACORN runs a vast network of affiliates across the country that facilitate its money-shuffling racket.
Here’s the deal:
ACORN International, now Community Organizations International on paper (but not on the web yet), is the breakaway baby of disgraced ACORN founder Wade Rathke — who clung to the outfit after being deposed from ACORN over his brother Dale’s embezzlement of nearly $1 million. Acorn International is not new. It’s been around since at least 2004. In addition to his world travel for the organization, Rathke blogs and mobilizes at “Chief Organizer.org,” his old title at ACORN, and still appears to be using the ACORN name on his Twitter account. His obstinate refusal to leave has caused massive heartburn on the Left — and they’ve tried hard to keep all the legal machinations hush-hush.
Inside ACORN, the new generation of power brokers has been fighting for a year to wrest control of the ACORN empire from the Rathkes.
I obtained an internal memo dated July 22, 2008 that details the power struggle. In the memo, “WR” is Wade Rathke. “DLR” is Dale Rathke. “BethK” is ACORN lawyer Elizabeth Kingsley, who raised questions about the legality of ACORN’s vast web of affiliates, “Bertha” is ACORN CEO Bertha Lewis. “EFC” is Elysian Fields Corporation, the entity that owns the 1024 Elysian Fields ACORN headquarters in New Orleans. “LaSOS” is the Louisiana Secretary of State. The whole memo is revealing, but pay specific attention to the passage referring to ACORN International, which I bolded for emphasis:
From: Marcel Reid
Subject: Fw: DEMANDS/ARSENAL MEMO UPDATE July 22 pm
Date: Tuesday, October 14, 2008, 1:16 PM
Pls clean and forward to [redacted].
— On Tue, 7/22/08, sbachman wrote:
Subject: DEMANDS/ARSENAL MEMO UPDATE July 22 pm
Date: Tuesday, July 22, 2008, 4:51 PM
DEMANDS AND ARSENAL MEMO—JULY 22, 2008
Here is the July 22, 2008 update. New provisions have been included in italics, like this sentence.
Generally the demand was that WR leave ACORN, as well as its “affiliated organizations.”
WR is no longer ACORN C.O., that’s the easy part. The harder part is “affiliated organizations,” which can have any number of meanings. Clearly, WR has a narrow reading of that term, ACORN will have a broader reading. While WR might appeal to various corporate technicalities, some of ACORN’s arguments would include the following
–many audits of many corporations in the “ACORN family” have appendices which refer to “Transactions With Affiliates” because “they share certain common functions and costs. They are under certain common controls buy individuals who could exercise influence over their day-to-day decisions.” I am FAXing a sample copy to Bertha, and can FAX something to other interested parties if they ask
–BethK has been reviewing ACORN minutes and it would appear that when WR reported to the ACORN Board about activities of other corporations, it was in a context wherein the word “affiliate” might be appropriate
–some corporations used the trademarked ACORN name, with clear allusion to ACORN
–almost every corporation in the “ACORN family” was initially nurtured with ACORN resources.
The degree to which some of these “children” remain “affiliates” is one thing. The fact that WR and his brother DLR used their positions as ACORN agents to insinuate themselves into positions of power in these corporations suggest the degree to which fiduciary duty requires them to leave.
WHO LEAVES? A search of the LaSOS suggests that WR is on about 30 corporate Boards, DLR is on about 10. Many of these are defunct organizations, but there is a question or whether we want to ensure that Wade is gone from all of them.
And the next question is the degree to which Dale is a kept brother and must be gone.
After that the question is what to do with WR’s shills. Bertha has suggested the key thing is to remove WR, but one should not underestimate how many shills he has placed in various corporations. I don’t know if Maude Hurd counts as a shill, but Mildred Edmond would, and I am sure there are more
So the question is how this demand gets formulated
WHICH CORPORATIONS? Local 100 was nurtured by ACORN, but I think US Labor law prevents ACORN from interfering in Local 100 affairs. And it is not clear that ACORN wants to bother with Local 100 anymore, except to collect money Local 100 has borrowed from ACORN affiliates (some $250,000). There are some Local 100 subsidiaries which ACORN probably doesn’t care about, e.g., some Baton Rouge Teachers organizations, a couple Texas organizations…. they are nonprofits set up to TRY to represent workers who are not allowed to organize themselves into collective bargaining units. I assume ACORN is ready to let these go to Local 100.
Many other corporations have more complicated issues, and here is a provisional list with my provisional comments. I emphasize my information may be limited here and may require comments and supplementation from others:
–Acorn Institute. I think this is clearly an ACORN corporation, but I have to observe that it seems to me that WR has been trying to fill it with shills. I think it is one of ACORN’s major 501c3s, and control of it needs to be monitored
–ACLOC. I think control of this organization is up for grabs, but the more critical question is who gets business from SEIU and ACORN. One could almost give this to WR because it’s worthless without business—yet if ACORN gave it to him it would have to be under the condition that the ACORN name was deleted. By way of additional information, WR seems to have founded a “CLOC” in Florida a while back. Maybe ACORN should keep ACLOC and WR should see what he can do with CLOC.
–AINT. This is ACORN International. WR should probably start his own darn international org. If he wants this one, he has to use it without the ACORN name. ACORN’s rights to the ACORN name outside of the USA is open to question, but within the USA, ACORN ought to be able to force him to stop, and to change the corporate name. [emphasis added]
–AMFM. This was founded as a media resource corporation. I thought there was nothing to this corporation until I found out that it is, in theory, owed some $45,000 once the $750,000 DLR moneys are distr ibuted. WR has no moral right to this money—or the corporation, for that matter. In any case, he has been scrambling to make this corporation “real” and had some Board meeting on July 2.
–ARC . This used to be a key 501c3 feeder for labor projects. Right now the Board supposedly consists of Steve Bachmann and Mildred Edmond. And Dale Rathke and Cornelia have supposedly left this Board. ACORN should advise Wade Rathke that this corporation is going to be cleaned up, and should probably be closed down. Steve Bachmann is going to ensure that if WR wants to try any tricks with this corporati[o]n, then WR is going to find his Mumsy is going to be very VERY upset.
–CCI. The point here is that if ACORN wants nothing to do with WR, then presumably CCI needs to terminate its contracts with any WR tainted organization. These conflict of interest issues are about to come to a head with CCI attorneys. So far our model has been “Well, in the past we wait to see if conflict can be worked out—THEN we worry.” In the past conflict has been resolved. In the present crisis the CCI lawyers may have to face these issues shortly. As an ethical if not a legal matter, the whole of CCI will have to face these issues also.
–COUNCIL. If ACORN wants to have nothing to do with WR, then any WR organization is going to have to be ejected from the COUNCIL, in particular, Local 100 and its subsidiaries.. This should not be hard if Maude Hurde, Alton Bennett, an Flora Johnson are ready to take those votes.
–EFC. There may be problems with other building corporations, but this is the Big Mama because there is so much property held by EFC. BethK is working hard to get on top of this situation which is a byzantine empire until itself. However, it does appear that it has been misused and abused by the Rathke brothers, and ACORN may have some self-help options available to it. For what it’s worth I send a copy of a sign I pulled from an EFC door while I was in NOLA on July 18, and others can have a copy if they give me a FAX number. (it relates to “Chaco Rathke, Property Management”) ACORN will have to decide how to fight for this property and what to do with it when its title to it is secure. I am inclined to suggest that ACORN sell all of it, if possible….
–SOCIAL POLICY. WR seems hot to control this magazine, so if nothing else it is a bargaining chip that might be offered to him in exchange for something else. As a matter of law, AISJ owns Social Policy, and it paid $30,000 for it a few years back. I FAXed a copy of the buyout conract to Bertha.
–WARN. This corporation is WAL-MART ALLIANCE FOR REFORM NOW, INC., and its Board members are –Wade Rathke, 3810 Burgundy Street, New Orleans, LA, 70117; –Rick Smith, 1344 W Cass St, Tampa, FL, 33606; and –Tamecka Pierce, 6537 Chantry St, Orlando, FL, 32835. The corporate name some what resembles ACORN’s. If it is a membership organization I find it hard to believe it is anything more than laughable. However, it may have a lot of grant money from some people some where? Bottom line is I don’t know much about this, and I don’t know if ACORN should care, or how to find out if ACORN should care.
On July 18 we learned there were about 170 organizations for which CCI had about 400 bank accounts—but many of them are dormant.
In any case, one would hope that the division of the ACORN world can be done through negotiation.
However, while we all hope for the best we must all prepare for the worst. The point of this section is to start a list of what sanctions ACORN can deliver on WR to induce him into a position which ACORN would consider satisfactory.
Some of the following weapons are major, some are minor, some ACORN might never want to employ; and of course, timing of the issuing and implementation of the sanction is always an independent factor to consider.
–SILVER BULLET. The is the name for the option proposed by Peter Dowd which suggests that WR might be sued as a trustee under ERISA, given his record of behavior with the ERISA funds that has been uncovered. For better or worse this is a trigger that should not be pulled until November or December
–BRONZE BULLET. The is the name for a variation on the silver bullet option: it suggests that WR might be sued for his abuse of ABA and AFund, two charitable funds, both quasi-ERISA funds.
–LEAD BULLET. The point here is that corporate law generally says that corporate formalities and protections are ignored when they are being abused for purposes of fraud. So to the degree that WR wants to play that game and we show that he’s a crook, the courts will ignore his games.
–L100. To what extent does the Local 100 Board and Local 100 members know about the perfidy of their Chief Organizer? Do they know how hokey their LM-2 filings are?
–DOL and Local 100. To what extent should ACORN monitor Local 100 activities and filings and report them to the DOL? Apparently a new election of Local 100 officers is due to happen in September 2008.
–Local 100’s debts. An initial review of Local 100’s LM-2’s suggests that Local 100 owes some $250,000 to ACORN affiliates. When will those debts be called in?
–501c3s and IRS. Depending upon whether or not WR walks away with any 501c3s in this deal, the life of these 501c3s can be made interesting by demands to see their public documents, and so forth. This is a game two sides can play, however, and the ACORN friendly 501c3s are going to have to ensure that they keep their acts together.
–DLR AmEx. AmEx seems to have a $125,000 garnishment action against DLR. I am not sure if it is in ACORN’s interest to assist AmEx…
–DLR and IRS. Has DLR has transactions that would reflect income, like forgiven loans, which, I believe, are treated as income?
–Publicity. I defer to the PR people, but I know we have press contacts, including a Times Picayune reporter.
–EFC, taking it back. Bertha has wondered about self-help, one of our lawyers has suggested trying an eviction notice first. Yankee courts don’t like self-help evictions. We need to know how NOLA courts would respond.
–SRB art. There is one of my better paintings which was in that CCI meeting room when I was in NOLA a few months ago. Now it’s gone. WR can have art given to him by me as a gift. But he can’t steal stuff that belongs to the Acorn Cultural Trust.
–WR, DLR and ACORN property. E.g., does he have corporate minutes?
–the DLR note. This may be more CCI’s business, but BethK is looking into whether DLR’s may be worth more than what CCI got for it. CCI has 4 months, I think, to rescind the deal and sell it to a nastier investor….
–PLEDGE BULLET. Beyond BethK’s research into whether or not the DLR note can be sold at a better price is the fundamental question of whether the Rathkes got any releases signed when they signed their promises and pledges. In other words, the theory is that they signed them in exchange for a release for all liabilities. There is a LOT of liability here, the money owed, the interest owed, damages to reputation, cost of recovery, etc., etc. But it appears that ACORN, CCI, and all the other organizations signed nothing when they got the papers from the Rathkes. So presumably they may still be able to sue them for losses for which they have not yet been compensated.
–BETH BUTLER, ACORN. The HO of CT has filed a complaint against Beth Butler, and the ICO will
have to evaluate the validity of the complaint and what sort of discipline if any is appropriate for imposing on Beth Butler—or the HO for lying, if he is lying, for that matter.
–SEXUAL HARASSMENT. Mitch Klein has filed a complaint against Chaco Rathke for harassment, and against Wade, Beth and Dine for retaliation. It is not clear that these items are subject to much negotiations, because they are matters of law. Depending upon what Alex Mora finds and recommends, ACORN will have to take whatever steps will pass muster with the EEOC, the DOL, and ultimately, the Courts. Another player in this play is EFC, because as landlord EFC must provide its tenants with safe environments, that don’t have its property managers engaging in sexual harassment, and that don’t allow its tenants to intimate other tenants. Again, much of this will turn on what Alex Mora finds, and generally what the law requires. ACORN has little room for negotiation or discretion here, but since it involves the Rathkes, its existence must be acknowledged and noted.
In another set of internal meeting notes from its interim staff management committee dated July 29, 2008, ACORN outlined steps it was taking to evict Wade Rathke and clear the decks. Wrangling over ACORN International came up again. Click for full-size:
The notes also detail how ACORN officials suspected that members’ health care funds were siphoned off to pay off the Rathkes’ debt. Read carefully and reflect on the inability of ACORN to ensure the security of its health care plans for its own workers while they lobby loudly to force everyone else into Obamacare. Click for full-size:
Bottom line: The name change story makes for an entertaining distraction, but misses the big picture.
The ACORN International name change has nothing to do with Rathke wanting to run away from the “taint” of scandal he enabled, fomented, and tried to cover up. The name change also has nothing to do with ACORN wanting to “re-brand” itself. It’s about getting rid of the old guard (Rathke) so that the new guard can protect its political enterprise at home and abroad.
Same Democrat-supporting, government-expanding business in the name of “community organizing.”
Just different management.