Republican Congressmen Call for Government to Further Investigate ACORN Spin-Off

By Fred Lucas | September 30, 2010 | 2:33 PM EDT

Sen. Susan Collins (R-Maine) questioned Obama administration officials about what has been done to keep visas out of the hands of terrorists since a Nigerian man with a U.S. visa tried to set off a bomb on an airplane as it landed in Detroit on Christmas Day 2009. ( Starr)

( – Two Republican members of Congress are calling on the Justice Department to state in writing whether it will initiate a criminal investigation into an organization, formerly known as the ACORN Housing Corporation, after an investigation found the group engaged in poor accounting measures involving federal grant money.

The organization, formerly affiliated with the Association of Community Organizers for Reform Now, or ACORN, is currently called the Affordable Housing Centers of America (AHCOA).

The AHCOA used grant money designated for counseling to potential homebuyers from the Department of Housing and Urban Development (HUD) to pay the salaries of terminated employees and also spent more than $2.5 million of HUD grants on salary expenses for fiscal years 2008 and 2009, according to a report by the HUD Office of Inspector General. (See Earlier Story)

The report further found that AHCOA could not document the time worked by its employees who were paid through the HUD grants, did not comply with federal procurement standards, and said the organization’s ability to account for taxpayer dollars “proved problematic in an environment of multiple funding sources and was unsupported.”

According to the IG report, “The caseload allocation method used by AHC [ACORN Housing Corporation] for HUD chargeable salary expenses was problematic and unsupported. Consequently, HUD had no assurance that the counselors’ salary expenses totaling $2.544 million charged to the HUD grants reflected grant-eligible services.”

Sen. Susan Collins (R-Maine), ranking member of the Senate Homeland Security and Governmental Affairs Committee, and Rep. Darrell Issa (R-Calif.), ranking member of the House Oversight and Government Reform Committee, sent a letter to Attorney General Eric Holder on Wednesday asking for further inquiry into the ACORN spin-off.

“The U.S. Department of Justice (DOJ), while previously acknowledging that ACORN has engaged in questionable hiring and training practices, has concluded that there is a lack of evidence to prosecute ACORN as a corporate entity,” Issa and Collins wrote.

“We call the findings of the report of the HUD Inspector General to your attention so that the Department of Justice can take appropriate action. Please provide a written response stating whether or not DOJ intends to initiate a criminal investigation of the evidence contained in the report,” they added.

The inspector general report recommended that AHCOA pay some of the federal grant money back if it is not able to document how it was spent. Further, it called on HUD to consider making the organization ineligible for federal funds.

“Services procured from ACORN ‘associated’ organizations failed to meet the required tests of ‘open and free competition,’” the IG report said. “We recommend that HUD’s Office of Single Family Housing, Program Support Division consider placing AHCOA in ‘inactive’ status while it initiates corrective actions to address the exceptions and recommendations in this report.”

In a response to the Office of Inspector General, the Department of Housing and Urban Development agreed to consider the recommendations, as reflected in a memo by Vicki B. Bott, HUD’s deputy assistant secretary for single family housing, included in the appendix of the report.

HUD spokesman Brian Sullivan told on Tuesday that the department has no more to say on the matter beyond what was stated in Bott’s memo.

In a separate letter on Wednesday, Collins and Issa called on HUD Secretary Shaun Donovan to implement the IG’s recommendations and to further investigate grants that AHCOA received.

“The OIG [Office of Inspector General] also reported that ACORN received more than $25.8 million from NeighborWorks America (NeighborWorks), a congressionally chartered nonprofit organization headquartered in Washington, D.C.,” Collins and Issa wrote. “Additionally, we request that you commence an investigation into whether any of the funds awarded by NeighborWorks were misappropriated by ACORN.”

AHCOA Executive Director Mike Shea said in a statement after the IG report was released that his organization has fully cooperated with the inspector general and that the organization will work with HUD on the issues raised by the report.

“This exhaustive, nine-month review found principled disagreement about one accounting procedure and a few procedural errors, but no illegal or intentional wrongdoing,” Shea said. “Throughout the audit we made all staff, records and clients available to the OIG team to allow their review to be as comprehensive and accurate as possible.”