One of the largest progressive community based organizations in the country, Association of Community Organizations for Reform Now (ACORN) announced its founder has stepped down. Wade Rathke, who founded ACORN in 1970, left his position as the organization’s chief organizer after an embezzlement scandal that occurred eight years ago surfaced last month involving his brother and the group’s finances. ACORN’s national board asked Rathke to step down from his position about a week ago. Rathke’s brother, Dale, embezzled almost $1 million from the community group but the crime was handled internally and not reported to the police, allegedly at the behest of Wade Rathke.
From an article on Huffingtonpost.com:
The right-wing blogosphere is abuzz over the article, which reported that an ACORN staff-person embezzled almost $1 million from the organization’s coffers eight years ago. (The aggregate budgets of ACORN and its affiliate organizations back then totaled about $41.5 million). ACORN immediately established new internal controls to put the organization’s financial house in order. But ACORN’s founder and chief organizer, Wade Rathke, covered up the incident in order to protect the wrongdoer, his brother Dale, who at the time was the group’s chief financial officer. Even worse, he kept his brother on the payroll until June 2, although he was long before removed from having any responsibility for the group’s finances.
Only a handful of top ACORN staff knew about the scandal, and Rathke persuaded them to keep it quiet in order, he argued, to protect the group’s reputation. The staff group obtained an enforceable restitution agreement so that the funds would be returned to ACORN. With the help of friends and family, his brother has now repaid all the stolen funds. But now that the scandal has surfaced, Wade Rathke has resigned, and his brother has been fired.
According to an article in the New York Times, New York City ACORN leader, Bertha Lewis said ACORN has received $210,000 in restitution since 2001. An unidentified donor is bailing out the Rathke family for the rest of the money.
From the New York Times:
“Clearly, this was an uncomfortable, conflicting and humiliating situation as far as my family and I were concerned,” he said, “and so the real decisions on how to handle it had to be made by others.”
The executive director of New York Acorn, Bertha Lewis, who has been named director of an interim management committee set up to run the national group’s day-to-day operations, said Dale Rathke was paid about $38,000 a year but that none of that money was used to pay back Acorn.
Instead, she said, the Rathke family has paid Acorn $30,000 a year in restitution since 2001, or a total of $210,000.
A donor has offered to give Acorn the rest of what the Rathkes owe, and an agreement to that effect should be finalized in coming days, Ms. Lewis said.
ACORN is implementing fraud prevention mechanism and according to a statement by the organization’s president Maude Hurd.
“We want to assure our many friends and supporters that ACORN’s Board has taken additional steps to ensure increased transparency and accountability. We have a very strong management team in place. Bertha Lewis, the Executive Director of New York ACORN – as a member of that team — has been named interim Director of the organization’s Management Committee, with responsibility for managing the day to day affairs of ACORN.
We are hiring an outside accounting firm to examine our financial controls and will be instituting any necessary safeguards.”