According to a July 9, 2008 article in the New York Times, Dale Rathke, the brother of ACORN’s founder, Wade Rathke, “embezzled nearly $1 million from Acorn and affiliated charitable organizations in 1999 and 2000.” The Times reported Dale Rathke embezzled $948,607.50, “carried as a loan on the books of Citizens Consulting Inc., which provides bookkeeping, accounting and other financial management services to Acorn and many of its affiliated entities.” ACORN “chose to treat the embezzlement of nearly $1 million eight years ago as an internal matter and did not even notify its board.” According to an October 10, 2008 New York Times report, ACORN “had failed to disclose the theft for eight years.” Dale Rathke remained on ACORN’s payroll until June 2008, when news broke of his wrongdoing.

Like all seeds this ACORN Grew… Back in October Louisiana Attorney General Buddy Caldwell charged that the embezzlement of one million dollars was actually FIVE Million DollarsToday the AG executed a search warrant on ACORN’s New Orleans offices and removed about 100 computers with the purpose of learning more about the Rathke embezzlement and the subsequent ACORN cover-up:

ACORN hard drives to be returned after data is copied by state investigators
By Brendan McCarthy, The Times-Picayune

Agents from the state Attorney General’s Office executed a search warrant Friday on ACORN’s local headquarters, seizing roughly 100 computers and files as part of an ongoing state embezzlement and accounting fraud investigation.

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Attorney General Buddy Caldwell has been investigating the community organizing agency since June.

The seizure on Friday focused on computers and “electronic media,” such as e-mail and files, said David Caldwell, an assistant attorney general and son of the attorney general.

“The search was pretty broad,” said the younger Caldwell, who heads a state public corruption unit. “Now we don’t have to start worrying about them (computers) walking off.”

About 100 computers were taken from the agency’s offices in a seizure that lasted most of the day.

David Caldwell said the probable cause cited in the search warrant stemmed from ACORN’s own acknowledgement that one or two recently terminated employees may have taken computers or other pertinent materials from the office.

In the state investigation, ACORN attorneys are citing an accountant/client privilege as the basis for withholding financial files, Caldwell said.

The Attorney General’s Office issued subpoenas in August seeking documents related to former ACORN International President Wade Rathke and his brother Dale Rathke, who kept the group’s books. Those subpoenas were focused on possible ACORN violations for nonpayment of employee withholding taxes, obstructing justice and violating the Employee Retirement Security Act.

Early last month, Caldwell’s office issued other subpoenas for records from ACORN’s New Orleans office in the 2600 block of Canal Street, where the organization — now moving its national headquarters to Washington — has long been based. The seizure on Friday was an outgrowth of those subpoenas, according to Caldwell’s office.

ACORN Deputy Director of National Operations Brian Kettenring released a statement Friday noting that agency has been cooperating with a “variety of governmental entities across the country to provide” requested information and documents.

“We were told that the AG’s office has no criticisms of ACORN’s cooperative efforts, but rather that the warrant was issued because of concern that former local ACORN staff members had and may intend in the future, to remove or alter electronic documents.”

The state investigation is taking place as the community organizing behemoth undergoes seismic shifts, and has seen some members form a reform group.

David Caldwell said state investigators will copy the hard drives from ACORN’s computers and return them next week. The computers contain payroll information for the national organization. Caldwell noted that some computers were not taken Friday because they would have affected the agency’s immediate payroll, and forced some to go without paychecks. Caldwell said investigators worked with ACORN members and will pick up those items in the near future.

People inside and close to ACORN were angered by news last spring that Dale Rathke had taken close to $1 million from the organization, which is billed as an advocate for poor and working-class people.

But in the subpoenas, the state attorney general’s office suggested that the embezzlement may have been on the order of $5 million, and that ACORN’s current CEO, Bertha Lewis, acknowledged as much at an Oct. 17, 2008 board meeting, soon after she assumed the position.

Lewis blasted the Attorney General’s investigation last month, saying the state agency had bought a misleading version of events that she said was being peddled by disgruntled former ACORN board members.

Some ACORN members created a reform group, dubbed ACORN 8.

“The ACORN 8 have always sought a forensic examination and an independent audit of ACORN and its related entities,” group President Marcel Reid said in a statement released Friday. “And we were thrown off the board for attempting to investigate a $1 million embezzlement.”

Amid the infighting, the agency recently faced a firestorm of criticism by the release of embarrassing videotapes in which ACORN workers in several cities appeared to be offering helpful business advice to a young man and a woman posing as a pimp and prostitute.