New York ACORN Front Group Based in New Orleans Gets Taxpayer Money

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ACORN logoOne of the defining hallmarks of the Association of Community Organizations for Reform Now, or ACORN, is its propensity for using front organizations to advance its goals. The New Orleans-based nonprofit organization has fully 360 subsidiary and adjunct groups. Lately, one of its affiliates, a misleadingly-named nonprofit entity called New York Agency for Community Affairs, Inc. (NYACA), has been at the center of attention. A recent probe by a consortium of New York City newspapers shows NYACA thus far in this year alone has received hundreds of thousands of dollars from New York state and local taxpayers for political campaign services. In many cases, the lawmakers who earmarked the funds had been locked in close re-election campaigns that used NYACA volunteers. It's no small wonder that NYACA and ACORN overlap to the point of being nearly indistinguishable.

According to its mission statement, NYACA was founded "to provide a vehicle for grassroots community organizations to increase their capacity to meet the needs of low- and moderate-income communities." The group's avowed purpose is assisting homeowners facing foreclosure and renters seeking to buy a home. But in practice it is a cleverly-disguised conduit for ACORN to contribute money to left-of-center New York politicians in tight re-election races. "There seems to be some sort of relationship between these different organizations," said Jill Manny, a New York University law professor and executive director of the National Center on Philanthropy and the Law, after reviewing NYACA tax records. That would be an understatement.

The New York Agency for Community Affairs has received more than small change. A recent investigation by Manhattan Media, a consortium of New York City neighborhood-based newspapers, reveals that NYACA and its ACORN alter ego have made out well. Examining tax forms, lobbying records, campaign finance reports, and contracts, researchers found that in 2009, NYACA has received $175,000 from eight state senators, $240,500 from 10 state assemblymen, and $85,000 from four New York City Council members. For 2006, NYACA reported a little over $1.3 million in revenues, almost all from government. That same year, the group paid out nearly $1.2 million for "contractual services" to ACORN and another $67,000 in direct grants. And in 2007, NYACA received more than $730,000 in government support, sending $711,152 of that to ACORN.  

How closely are the two groups linked? For one thing, there's the Internet. Clicking on www.nyaca.org routes the viewer to the website of ACORN Housing Corp., www.acornhousing.org. Even more curiously, the New York Agency for Community Affairs isn't based in New York at all, but at 2609 Canal Street, New Orleans, LA 70119, the same address as ACORN's local affiliate there. What's more, NYACA's chief organizer is Jon Kest, younger brother of ACORN National Executive Director Steven Kest. Jon Kest also serves as chief organizer for the local ACORN chapter in New Orleans. As ACORN has its national headquarters in New Orleans (1024 Elysian Fields Avenue), it doesn't take a huge leap of imagination to realize NYACA is an ACORN front. But NYACA isn't entirely devoid of a New York connection: One of its employees is Bertha Lewis, longtime head of ACORN's New York City affiliate until she took over last year as ACORN national CEO-chief organizer. And the Kests until about a decade and a half ago ran the New York City operation until Ms. Lewis assumed the reins. Even sports teams change their name if they move to another city. Apparently, ACORN affiliates don't.

Creative bookkeeping explains why ACORN saw fit to add an organizational layer in the form of New York Agency for Community Affairs. NYACA is registered as a "public charity," which exempts it from paying certain state and local taxes, and equally importantly, prohibits it from engaging in or supporting political activity. ACORN, on the other hand, is a "social welfare organization" - that is, authorized to conduct certain political campaign operations using public as well as private funds. ACORN in fact has received large sums of money from the Working Families Party (WFP), an entity founded by none other than Steven Kest in 1998 to move the Democratic Party leftward (Note: Under New York State election law, a party may "cross-endorse" candidates of other parties). The WFP describes itself as a coalition founded by ACORN, the Communications Workers of America and the United Auto Workers.

NYACA clearly wants it both ways. On one hand, the group wants to influence the outcome of elections, with organized labor playing a central role. On the other hand, it doesn't want to pay taxes connected with this activity. In other words, ACORN set up the New York Agency for Community Affairs as a legalized money-laundering operation - and possibly with some illegal misrepresentation of facts. According to records filed with the IRS and the New York State Attorney General's Office, NYACA declared no relationships with any outside organizations through common employees or officers. To believe that would require defining "relationships" in ways not found in Webster's Dictionary.

NYACA Executive Director Mariana Davenport thinks the group's critics are manufacturing something out of nothing. Through an e-mail she noted: "The organizations share staff and space. Although many of the NYACA board members are also members of ACORN, ACORN has no authority to direct NYACA." NYACA, she emphasized, is merely a "fiscal sponsor" for taxpayer funding for ACORN's foreclosure prevention and homebuyers' assistance programs, among other initiatives. But why would ACORN need such a "sponsor?" And why would ACORN employees, of whom Ms. Davenport is one, have a need to list themselves at a separate organization that does the same things?

This seeming bait-and-switch arrangement has another story as well: its connection to the well-publicized scandal that resulted in the forcing out of Wade Rathke, founder and longtime chief national organizer of ACORN, in the late spring of 2008. Rathke left amid revelations that he'd covered for his brother, Dale Rathke, during the latter's embezzlement of nearly $1 million from the organization back during 1999-2000. But it wasn't just Wade Rathke who likely had a hand in the cover-up. The following individuals sat on the ACORN management council at the time of the thefts and were made aware of the thefts: Steven Kest, Jon Kest, Madeline Talbott, Keith Kelleher, Mike Shea, Zach Polett, Helene O'Brien, Amy Schur, Liz Wolff, and Beth Butler. Of these persons, the Kest brothers, O'Brien and Butler still work for ACORN, while Shea runs ACORN Housing Corporation and Wolff runs special projects at Citizens Consulting, Inc. (CCI), the very group to which Dale Rathke, while as ACORN chief financial officer, allegedly routed the money he'd stolen.

If investigators examine the incestuous nature of the ACORN-NYACA combine, they're not likely to get any help from New York politicians who earmarked funds for NYACA. New York State senators who provided largesse include Eric Schneiderman, Velmanette Montgomery, Ruth Hassell-Thompson, Hiram Monserrate, Kevin Parker, Diane Savino, Eric Adams and John Sampson. New York City Council members include Annabel Palma, Bill De Blasio, Melissa Mark-Viverito and James Sanders. And State assembly members bestowing generosity were Sheldon Silver, William Boyland, Adam Clayton Powell IV, Hakim Jeffries, Vivian Cook, Audrey Pheffer, Annette Robinson, Richard Gottfried, Nick Perry and Daryl Towns. Current Deputy Bronx Borough President Aurelia Greene also funded the group while serving as a member of the assembly. In the case of ACORN, it's hard to know where legal activity ends and illegal activity begins.

Related:  "Issa Concludes ACORN IS a Racket."