« Prospect Heights Historic District Advances | Main | Landmarks May Stem Atlantic Yards Area Development »
July 13, 2008
Funds Misappropriated at 2 Nonprofit Groups
The NY Times
By Stephanie Strom
NYC ACORN, the group that signed the Atlantic Yards affordable housing pact with Bruce Ratner, and which professes to advocate for the underserved, has been concealing a dark secret for several years. Even after the discovery of the misappropriation of nearly a million dollars by the founder's brother, the national organization decided not to disclose the fact to its own board and continued to keep the brother on the payroll.
NYC ACORN Director Bertha Lewis, who signed the housing agreement with Bruce Ratner, is now interim national director.
A whistle-blower forced Acorn to disclose the embezzlement, which involved the brother of the organization’s founder, Wade Rathke.
The brother, Dale Rathke, embezzled nearly $1 million from Acorn and affiliated charitable organizations in 1999 and 2000, Acorn officials said, but a small group of executives decided to keep the information from almost all of the group’s board members and not to alert law enforcement.
Dale Rathke remained on Acorn’s payroll until a month ago, when disclosure of his theft by foundations and other donors forced the organization to dismiss him.
“We thought it best at the time to protect the organization, as well as to get the funds back into the organization, to deal with it in-house,” said Maude Hurd, president of Acorn. “It was a judgment call at the time, and looking back, people can agree or disagree with it, but we did what we thought was right.”
The amount Dale Rathke embezzled, $948,607.50, was 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.
Wade Rathke said the organization had signed a restitution agreement with his brother in which his family agreed to repay the amount embezzled in exchange for confidentiality.
Wade Rathke stepped down as Acorn’s chief organizer on June 2, the same day his brother left, but he remains chief organizer for Acorn International L.L.C.
He said the decision to keep the matter secret was not made to protect his brother but because word of the embezzlement would have put a “weapon” into the hands of enemies of Acorn, a liberal group that is a frequent target of conservatives who object to its often strident advocacy on behalf of low- and moderate-income families and workers.
Wade Rathke said he learned of the problem when an employee of Citizens Consulting alerted him about suspicious credit card transactions. An internal investigation uncovered inappropriate charges on the cards that led back to his brother.
“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.
NoLandGrab: This makes you wonder what else ACORN has been keeping from its constituents and supporters. Keep in mind that ACORN stands to profit financially from Atlantic Yards by acting as the administrator for the project's affordable housing component.
Posted by lumi at July 13, 2008 4:28 PM