Monday, October 13, 2008
Friday, September 12, 2008
ACORN HEADLINES- The Ghost of Rathke Lingers On while Board Members File Suit! First Reported here!!
I stated here two months ago that Rahtke was refusing to go! NY TIMES REPORTS:
Lawsuit Adds to Turmoil for Community Group
By STEPHANIE STROM
Published: September 9, 2008
In the wake of an embezzlement scandal that rocked the Association of Community Organizations for Reform Now, or Acorn, two of its board members are seeking a court order to force it to hand over financial documents.
They also are seeking to sever what they describe as continuing ties between Acorn and its founder, Wade Rathke, who resigned after it became public this summer that his brother had embezzled almost $1 million from the organization eight years ago. They contend that Mr. Rathke continues to direct the staff and expenditures.
“Acorn will suffer irreparable harm if the defendants are not restrained from contact with employees, expending and receiving, destroying or prohibiting the review of accounting and other data necessary to fulfill the fiduciary responsibility of the interim management committee,” the board members, Marcel Reid and Karen Inman, stated in the petition. Both serve on a committee established to lead Acorn.
The suit cites their concerns that money is being spent improperly and that important documents are being destroyed. It was filed on behalf of the entire 51-member board, but Acorn executives and some board members say Ms. Reid and Ms. Inman had no authority to file the suit or to claim to represent the board.
Acorn contends that Ms. Reid and Ms. Inman are trying to engineer a takeover, and on Tuesday, it demanded that the petition be withdrawn.
“We found ourselves after the fact having filed a lawsuit against ourselves,” said the Rev. Gloria Swieringa, a board member who leads the Maryland affiliate. “It was not authorized nor did we know anything about it until this firestorm over it erupted.”
The suit is a sign of the turmoil that has rocked Acorn since the embezzlement by Dale Rathke, Wade Rathke’s brother, was revealed to the board in June.
The embezzlement, which Acorn said involved $948,607.50, was discovered in 2000 but concealed by senior executives until a whistle-blower told a foundation leader about it in May.
Wade Rathke was forced to step down as chief organizer, the top executive position. However he remained the chief organizer of Acorn International, which shares offices in Acorn’s headquarters in New Orleans. The Rathke family pledged to repay Acorn.
“Even though his relationship with Acorn has been terminated,” the petition says of Wade Rathke, “he continues to meet with staff members regarding this” — the embezzlement — “and other governance issues which impeded the ability of the interim management committee to perform its function.”
Bertha Lewis, who was appointed interim chief organizer when Mr. Rathke stepped down, said the lawsuit was unnecessary. But Ms. Lewis echoed concerns about Mr. Rathke’s continued involvement, saying Acorn had asked him to leave its offices.
“Mr. Rathke stubbornly refuses to do that, so he sort of haunts that office, tries to talk to folks doing their work,” she said.
Mr. Rathke said he had no role in managing Acorn. “I was with the organization for 38 years, and there are many people I hired and supervised, and I have great relationships with them,” he said. “I haven’t been involved in supervising them. Are they saying that simply because I breathe, I exist, they have a problem?”
The suit put the extent of Dale Rathke’s embezzlement at “an amount that may exceed one million dollars,” more than the amount disclosed this summer.
James Austin Gray II, the lawyer who filed the petition, said the board had passed two resolutions in the summer authorizing the management committee to hire legal counsel. “The board is just trying to do its fiduciary duty,” Mr. Gray said.
Ms. Reid declined to comment, and Ms. Inman did not respond to messages on her mobile phone.
Coya Mobley, a board member representing Ohio, said that she recalled those resolutions and that in her mind, they gave Ms. Inman and Ms. Reid authority to file the petition for the board.
Acorn executives and some board members, however, said the resolutions did not give permission for a lawsuit. Over the last couple of weeks, Ms. Lewis has worked to get board members to withdraw the petition through a process under Acorn’s bylaws that allows polling by phone. She said 35 members had submitted written forms ordering the petition’s withdrawal, while 12 elected to continue seeking court intervention. Three members could not be reached, and one refused to cast a vote.
“I want answers,” said Ms. Mobley, who first opposed the suit but then voted to continue it. “Why are they still negotiating with Wade Rathke? Why are the people on staff who knew about this embezzlement still on the staff?”
Ms. Lewis said that she understood that some board members were impatient but that the committee and board were working as fast as they could.
“I think the people who filed this petition probably had very good intentions,” she said, “and I lay this at the feet of a lawyer who acted precipitously.”
Friday, August 22, 2008
ACORN Headlines and News: ACORN's former CPA Speaks Out!!! Says-The embezzlement could have started long before 2001!
Dear Rick: I was the only CPA for ACORN from inception until 1995. Since reading your report and comments I have become confident of your good intentions. Therefore I have decided to open up with regard to any questions that you or your subscribers may have.
Yes, it is quite possible that the “misappropriations” go back before my retirement. So I have great sympathy for Wade’s torment. Even before 2001. Wade knew before I left that Dale had total domination of accounting and banking functions of all the 50-75 separate corporate entities. Each corporation had a bank account at Whitney. Dale got a consolidated daily bank statement that gave him the debit or credit balance of each account and net total. Dale was a check signer on every account. Wade was not. That’s about all anyone knew after their only competent bookkeeper resigned about 1988. Accounting decended into chaos and I was in a constant helpless depression after that until 1995. Hearsay from a former insider informed me in 2001 that Dale got caught making $1 million improper payments to American Express but they would recover from his inheritance some day and my successor auditors were all over it. I thought, thank God, not on my watch. I perked up but held my tongue.
After thinking it over, I think I agree with the cover up strategy in 2001. I guess I participated in it by remaining silent. I believe that it’s the only way ultmate restitution was probable at the time. But I remain curious. Why shouldn’t restitution be made for the $38,000 per annum paid Dale since 2001? Surely the firing would have taken place in 2001 except for the cover up.
I should confine my comments to the situation as I knew it prior to 1995. I defer all other questions as to subsequent events and transactions to my successors who were emminently qualified and informed of all problems that needed attention after my departure. I believe that they know every thing that is significant about this matter. I wish they would get permission to publish a case study on this matter. I have had no communications with them since 1995.
Somebody said “Absolute power corrupts absolutely”.
Dear Rick (of your comment of 8/19 at (9:08 pm): Answers to two questions: (1) After 1988, with the resignation of the very competent Sue B., the accounting system quickly disintegrated. There were no computers. It had all been done by hand. Sue had trained a payroll clerk and bank reconciler, JoAnn B., who had learned to make payroll tax deposits, quarterly payroll tax reports, individual earnings records and annual W-2 forms and reports. But all cash and general journals and ledgers fell behind and contained thousands of uncorrected errors due to inability or failure to hire enough accountants with the capacity to cope with the challenges. Forget the usual forms of internal control. There were virtually none possible. Dale trusted no one but himself. Or trusted completly in those incompetant for the task. Forget transparency and disclosure on a timely basis. It was not possible. Don’t ask me, I still live in Little Rock where the whole thing started. Sue B. started in Little Rock under Wade and moved all the financial records to New Orleans when Wade moved. Dale started later in New Orleans, with quickly increasing financial authority, after graduating from Yale (Phd.English), but before Sue B. left. Sue B. and Dale finally had issues which could not be reconciled. She told me, “I hate my job and I hate my life” and always had a headache, but could do or find anything I needed . After Sue B.’s departure in 1988 the bank statements and cancelled checks and check book stubs and bank reconciliations were the only reliable records. When it came time to prepare annual federal and state forms 990 and 1120 it was up to me. If financial statements had to be reconstructed from the bank statements and cancelled checks I did the minimum necessary one entity at a time. I had about 50 file boxes with working papers that I carted back and forth between Little Rock and New Orleans until finally Dale provided some used filing cabinets for me in New Orleans. Extensions were filed when necessary but the task of filing often fell 2-3 years behind. By the time I got finished the reports and returns were ancient history. The IRS never examined. No taxes were ever due so there were no penalties or interest. If anybody was dissatisfied they never contacted me. My name and signature were on all reports and returns. There were very serious deficiencies which I could not correct. They had to do with obvious comingling of funds between the separate corporations, much of which was impossible to correct retroactively if not discovered immediately. Some probably innocent errors. Some probably deliberate and unauthorized cash transfers. I had nobody to tell but Dale. I wanted to resign or be fired. My commuting time and expenses were unbearable. Dale was up to a year past due in paying my monthly invoices. My capital was way inadequate for this. I was financing my life with credit cards. They needed to get a New Orleans CPA firm to take over. But with this mess who would accept it? About 1990 Dale agreed to meet with Arthur Andersen consulting experts I talked into coming down from Chicago to tell us what to do. Hey, that was cool, they even had a New Orleans office who could take over all the audit and tax work when new systens got things under control. Andersen spent one day in New Orleans talking to Dale and me and knew exactly what to do. A few days later Dale called and said Andersen had submitted a detailed proposal with a fee estimate of $100,000 for installing a computer system. He said no, too expensive. I should have resigned immediately, but I could not resign without getting paid. Everybody knows what later happened to Andersen for not resigning from Enron when they had conflicts regarding material differences of opinion and judgement affecting the audit reports, disclosures and transparency. Next thing I knew, Dale allowed a Great Plains computer accounting system to be installed. How they got it up and running I’ll never know. What I was interested in was the output. I quickly learned the saying, “Garbage in, garbage out”. The first thing that had to be created was a chart of accounts and account numbers. I think Dale did it all by himself. With abont 75 corporations and who knows how many restricted and unrestricted funds it must have been a daunting task. The chart was about the size of the N. O. phone book and growing daily. If the first coding of an entry was incorrect, too bad, it could not be deleted and reentered correctly. Instead a new entry had to be made transferring the transaction from the incorrect account to the correct account. And if that correction was not done correctly yet another correcting entry had to be made. I just could not enjoy this. I hated my job and hated my life. Yup, depressed. After a couple of years like this, I discovered the very fine old N. O. CPA firm of Duplantier et al. They had some expertise with the Great Plains system and were willing to come in and survey the situation. Dale agreed. Right away I gave them complete access to all my files and even gave them all the tax returns to prepare. Whatever they wanted to do. They did a lot of tax work in a few months while I finished up a couple of audits. I asked them if they were getting paid for what they had done so far. They said yes and they had the ability to go do something else if not. I told them that my unpaid bills were substantial but that I wanted out. One day in Decenber, 1994, I was in Dale’s office briefly and at a glance I saw a whole pile of Engagement Letters on his desk. I knew immediately they were from Duplantier and a separate letter for each corporation. Hallaluia, I had been delivered. In January, 1995, Dale ordered me out of his office and we haven’t spoken since. Neither have I heard from Wade. In 1996 I sued to collect the balances due on my accounts. The defense had no defense and I was awarded a judgement of $200,000. The next step, to collect the judgement, was disappointing. I was persuaded to settle for $140,000. This enabled me to pay off all my secured creditors, but I wrote off $60,000 and was done with it. Easy come, easy go.
(2) I think I approve of the “cover up strategy” because I knew that the Duplantier firm was on the job and had seen the evidence and chose to join in. My source said that Wade had seen a report that caused him to question why the payments to American Express were so high? So they searched for the American Express statements and found that Dale had them all in his possession. He still must have had the power to pay without restrictions by anybody. He agreed to restitution that was probable someday. His motive may never be known. If Dale were fired in 2001, Wade probably would have been forced to resign at the same time. I don’t know when Acorn International was formed. At least there has been 8 years to prepare for both departures at once. I think that the life of the associated organizations bearing the ACORN brand is more likely to survive after these preparations than if both departures were sudden and without warning in 2001. There are about 500,000 members that probably want them to survive too.
Sunday, August 17, 2008
Head of Foundation Bailed Out Nonprofit Group After Its Funds Were Embezzled
New article from NY TImes revelas multiple Whistle Blowers working to shed light on Rathke attempt to avoid the Embezzlement issue:
By STEPHANIE STROM
Published: August 16, 2008
When the embezzlement of almost $1 million by the brother of the founder of the Association of Community Organizations for Reform Now, better known as Acorn, surfaced last month, the organization announced that an anonymous supporter had agreed to make it whole.That supporter was Drummond Pike, the founder and chief executive of the Tides Foundation, which channels money to what it describes as progressive nonprofits, including some Acorn charitable affiliates.Mr. Pike is a friend of Wade Rathke, the founder of Acorn and its leader until the scandal broke, and he agreed to buy the promissory note that required the Rathke family to repay Acorn the money that Mr. Rathke’s brother, Dale, had stolen.Mr. Rathke is a member of the board of the Tides Foundation and other Tides-related organizations.Since 2000, the Tides Foundation has provided more than $400 million to nonprofit groups, with much of that money flowing out of donor-controlled accounts it manages in the same way that the Fidelity Charitable Gift Fund or a community foundation does.John A. Powell, board chairman of the Tides Network, the umbrella organization for various Tides affiliates, wrote in an e-mail message to The Times that Tides had no involvement in the matter and that none of its money was used to buy the Rathke family’s debt to Acorn.He said Mr. Rathke was on a leave of absence from all Tides boards.In 2000, Acorn discovered that Dale Rathke had embezzled $948,507.50 from it and affiliated charitable organizations. The management committee that controlled the organization decided not to alert law enforcement officials, and negotiated an agreement with the Rathke family to repay the money.That agreement was carried on the books of an affiliate, Citizens Consulting Inc., as a loan to an officer. Sometime in June, Mr. Pike bought the loan from the affiliate, according to e-mail messages between senior executives at Acorn that were provided to a reporter by Acorn employees, who requested anonymity because they feared losing their jobs.Mr. Pike refused to confirm or deny that he had bought the note. “As a rule, I do not comment on my personal finances,” he wrote in e-mail messages in answer to questions about the deal.But e-mail messages among Acorn’s senior executives discuss how to keep Mr. Pike’s identity secret, even as they acknowledge that some of the foundations and philanthropic advisers that have supported Acorn and its affiliates know that he bought the note.“Does Drummond know the word is out?” Steven Kest, the executive director of Acorn, wrote on July 4. “If not, shouldn’t someone tell him?”In a July 12 e-mail message to Mr. Kest, Acorn’s political director, Zach Pollett, wrote: “I talked to Drummond on this yesterday and had Beth Kingsley” — Acorn’s lawyer — “prepare a ‘keep your yaps shut’ confidentiality memo to people at Acorn and CCI.”Charles D. Jackson, a spokesman for Acorn, said the organization would not comment on the purchaser of the note.Acorn’s board members and senior executives have signed confidentiality pledges that forbid them from disclosing Mr. Pike’s identity or discussing the purchase agreement, according to three Acorn contributors who asked to see the agreement but were told they would have to similarly pledge confidentiality. They declined.But a handful of executives at foundations that have contributed to Acorn and Tides have learned through connections at those organizations that Mr. Pike was the buyer.
ACORN Whistle Blowers Multiply, Drummond Pike Buys Off Embezzlement, Rathke takes leave of absence from Tides Foundation
Head of Foundation Bailed Out Nonprofit Group After Its Funds Were Embezzled
Published: August 16, 2008
When the embezzlement of almost $1 million by the brother of the founder of the Association of Community Organizations for Reform Now, better known as Acorn, surfaced last month, the organization announced that an anonymous supporter had agreed to make it whole.
That supporter was Drummond Pike, the founder and chief executive of the Tides Foundation, which channels money to what it describes as progressive nonprofits, including some Acorn charitable affiliates.
Mr. Pike is a friend of Wade Rathke, the founder of Acorn and its leader until the scandal broke, and he agreed to buy the promissory note that required the Rathke family to repay Acorn the money that Mr. Rathke’s brother, Dale, had stolen.
Mr. Rathke is a member of the board of the Tides Foundation and other Tides-related organizations.
Since 2000, the Tides Foundation has provided more than $400 million to nonprofit groups, with much of that money flowing out of donor-controlled accounts it manages in the same way that the Fidelity Charitable Gift Fund or a community foundation does.
John A. Powell, board chairman of the Tides Network, the umbrella organization for various Tides affiliates, wrote in an e-mail message to The Times that Tides had no involvement in the matter and that none of its money was used to buy the Rathke family’s debt to Acorn.
He said Mr. Rathke was on a leave of absence from all Tides boards.
In 2000, Acorn discovered that Dale Rathke had embezzled $948,507.50 from it and affiliated charitable organizations. The management committee that controlled the organization decided not to alert law enforcement officials, and negotiated an agreement with the Rathke family to repay the money.
That agreement was carried on the books of an affiliate, Citizens Consulting Inc., as a loan to an officer. Sometime in June, Mr. Pike bought the loan from the affiliate, according to e-mail messages between senior executives at Acorn that were provided to a reporter by Acorn employees, who requested anonymity because they feared losing their jobs.
Mr. Pike refused to confirm or deny that he had bought the note. “As a rule, I do not comment on my personal finances,” he wrote in e-mail messages in answer to questions about the deal.
But e-mail messages among Acorn’s senior executives discuss how to keep Mr. Pike’s identity secret, even as they acknowledge that some of the foundations and philanthropic advisers that have supported Acorn and its affiliates know that he bought the note.
“Does Drummond know the word is out?” Steven Kest, the executive director of Acorn, wrote on July 4. “If not, shouldn’t someone tell him?”
In a July 12 e-mail message to Mr. Kest, Acorn’s political director, Zach Pollett, wrote: “I talked to Drummond on this yesterday and had Beth Kingsley” — Acorn’s lawyer — “prepare a ‘keep your yaps shut’ confidentiality memo to people at Acorn and CCI.”
Charles D. Jackson, a spokesman for Acorn, said the organization would not comment on the purchaser of the note.
Acorn’s board members and senior executives have signed confidentiality pledges that forbid them from disclosing Mr. Pike’s identity or discussing the purchase agreement, according to three Acorn contributors who asked to see the agreement but were told they would have to similarly pledge confidentiality. They declined.
But a handful of executives at foundations that have contributed to Acorn and Tides have learned through connections at those organizations that Mr. Pike was the buyer.
Wednesday, July 30, 2008
Well personally, if what we are being told is true The Staff caught this problem and shared it with one Board member, Maude Hurde who agreed after being talked into it by the management team into keeping it quiet.
As far as more fiduciary oversight? Wade organized his board to be a board that acted on his recommendations from day one. It is interesting how for years we were told to tell people “4 african American women from Little Rock Arkansas founded ACORN”.
Today Wade has finally owned up to the truth, he a white, wealthy, upperclass, hack went to Arkansas and after his friend George Wiley passed on proceeded to found, shape, and design ACORN to serve him. He brags that he founded ACORN today. Well guess what? The reputable true grassroots orgs I know of were indigenous developments that were started by residents of directly affected communities. They weren’t founded by some carpet bagger that picked a spot on a map and said I think I will organize this community to build a non-profit. As sad and prophetic as it it might be of what came to pass over 38 years, the modus operandi never changed.
My first drive went down like this. I was told to pick a block of 1000 households and go there and begin recruiting members who would work with me to organize an ACORN chapter. They had never heard of ACORN and they never got a chance to hire me. They had no say in who or how the drive would be structured because Wade designed the drive to be a certain way over a 10-12 week period. THe members would have 4 organizing committee meetings. If the members wanted to have six I was told by my supervisor to cut it off at four. To organize the “members” to want to do it in 4 or 5 tops. I was told to get them to identify an issue that was winnable and small. When they wanted to go for something that was a systemic big issue I was told to get them to do something like a speed bump or a stop sign. Then I was told they would do a big meeting and then they had to do an action. Regardless of how they felt about it. Regardless of what was going on inthe community. I was told to have the officers identified before they were elected so even though at the big meeting elections were called for, it was really to be an acceptance of predetermined outcomes. This is the big rub abd it has everything to do with why the board did not have oversight. ACORN has always been about predetermined outcomes. Go and read Gary Delgados book about ACORN. It was that way when he left and it is that way now. How can that be considered a member run organization. It isn’t it never was. Iwas organizing a year before my mmembers were asked if they wanted to hire me.. That is a little ridiculous. I organized them for a year and then asked the bord to hire me? Seems like I was hired whether they liked it or not.
Saturday, July 26, 2008
US ACORN WANTS RATHKE GONE, IN USUAL STYLE RATHKE STRUCTURES INTERNATIONAL ACORN SO HE CAN'T BE REMOVED!
MEMBERS WANT REFORM OF ACORN, RATHKE HARDLINERS DUG IN LIKE THE TALIBAN
FORMER HO's BANDING TOGETHER TO BRING NEW LIGHT TO ACORN
ACORN GET'S 7.8 MILLION TO SQUANDER AWAY ON HOME FORECLOSURES WHILE PROBLEMS ARE NOT FIXED!!
SEXUAL HARASSMENT RAMPANT AT ACORN FOR DECADES, STAFF TOLD TO SHUT UP OR LEAVE
Rathke Chief Organizer of the WORLD!!!!
SO as has been laid bare by recent insiders from ACORN and based on what we have known for sometime:
Rathke has been laying his plan to leave ACORN for 8 years. Now we all understand his obsession with building ACORN INTERNATIONAL.
AI is set up with a seperate board outsid US boundaries.
AI has offices in countries with no extradition treaties to the USA.
THINK ABOUT IT ACORN NUT HEADS.
Wade up in front of the room with his little slide shows and everyone sitting there thinking "our offices are struggling here why is he expanding.
Wade can move to India or Argentina with impunity and run WORLD ACORN the WALMART OF ORGANIZING.
Meanwhile back at the ranch members are pissed and many staff are more pissed.
WADE IS EATING LAMB VINDALOO AT THE TAJ ! Dale is carrying his bags and setting up an accounting firm.
Helene is browbeating some poor organizer in LIMA and telling her if she doesn't get her numbers up they will have to close the TIKI hut office they built from scratch because the price on thatch has gone up.
Then Wade will be beamed by satellite to the Annual ACORN Year End Year Beginning Meeting With a Yak carrying his laptop and Sat phone into Hindu Kush where he is positioning himself to make an organizing deal with the Taliban on the Paskistan Afghan border. He is pretty sure he form an alliance with OBL to buy the Taliban.
Thus bringing about world peace and gaining a rise in pay for Sherpas working on Everest.
Wade Rathke is thought to be the father of the organizing technique of just buying up every union and organzation in the world and changing it's name to ACORN.
Rathke Hardliners Dug Into Caves in Arkansas like Taliban refusing to give up control!
Refusing to give up control of ACORN Rathke's innner circle have holed up in a cave in Arkansas intent on waiting out any possible decision to move forward. ACORN USA in an effort to lure them into the open left a stack of bankdrafts from uppermiddleclass communities with checks stapled to them hanging in trees outside the caves. The hardliners refused to come out though in a rare display of common sense they are hoping that a hurricane as big as Katrina will hit New Orleans and people will forget the current conflict in the chaos. Then they will come back in to scrub streets abandoned by residents in an effort to scarf up some juicy federal grants.
Former ACORN HO's Banding Together:
Email lists, phone lists, mailing lists, funder contacts, International network of contacts, allied orgs pissed about the way they were treated.
More coming. Lawsuits