ACORN HEADLINES: Members File Suit!
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 Inman are trying to engineer a takeover, and on Tuesday, it demanded that the petition be withdrawn.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.”