On October 19, 2011, Cause of Action (formerly known as Freedom Through Justice) successfully pressured NeighborWorks America to publicly release all Office of Internal Audit reports from January 2009 to the present.  Most of the public, even Washington insiders, have little idea that NeighborWorks – the government’s largest funder of foreclosure mitigation grants – had an internal audit office that conducted investigations.  One of the Office of Internal Audit reports titled, Special Audit on the Use of National Foreclosure Mitigation Counseling Program Grant Funds by ACORN Housing Corporation,Inc., and originally issued to former Senator Chris Dodd over a year ago, sheds light on the relationship between the Affordable Housing Centers of America (AHCOA, formerly Acorn Housing) and the Association of Community Organizations for Reform Now (“ACORN”).   According to the Audit, “[a]lthough AHC and ACORN might be incorporated as separate entities in form and structure, the financial transactions noted below evidence extensive relationships between both organizations that may undermine claims of an ‘arm’s length relationship’ between them.”  In fact, NeighborWorks found the following violations by AHCOA:

1. The awards of ABC-executed contracts with ACORN, totaling $6.1 million, violated the intent of the OMB A-110 “organizational conflict of interest” and “revision of budget and program plans” requirements;
2. The contractual awards are highly material in that significant shares (44% and 17% for Rounds 1 and 2, respectively) of total funding were outsourced to ACORN;
3. The contract awards to ACORN represent major overruns against both (a) planned amounts for outreach represented in AHC’s  applications  for NFMC funding and (b) AHC’s  formal representations  to NeighborWorks America shortly before issuance of these contracts;
4. Significant relationships were evidenced between AHC and ACORN; calling into question whether these were valid arms-length transactions. The Round 1 contract was non-competitive (sole source) and the Round 2 contract was awarded after AHC received just one bid.

While it is now clear that AHCOA and ACORN are affiliated, these revelations by NeighborWorks came too late, as the U.S. Department of Housing and Urban Development (“HUD”) issued a $350,000 grant on September 2, 2011 and a $300,000 grant on August 8, 2011, to AHCOA.  Despite NeighborWorks’ audit showing these grants to have violated the Continuing Appropriations Resolution signed by President Obama on December 16, 2009, HUD has continued to enrich AHCOA at the taxpayers’ expense.

Sadly, it appears that NeighborWorks’ delay in releasing its report may have been intentional, as a Government Accountability Office (“GAO”) appropriations decision determining AHCOA was not an ACORN affiliate became final on September 29, 2011 and therefore not subject to reconsideration.  (See Cause of Action’s letter to the GAO requesting they review their decision).
Based on Cause of Action’s investigation, it was able to determine that Congress asked NeighborWorks to post its internal audits several months ago, but the recommendation was at first denied by NeighborWorks’ Board of Directors.   One of these Board members is an Assistant Secretary at HUD.  Given the fact that HUD’s General Counsel determined AHCOA was not an ACORN affiliate, it should be no surprise that HUD would attempt to prevent the release of an audit that refuted its conclusions concerning the relationship between AHCOA and ACORN.

NeighborWorks’ Board reconsidered its decision after Cause of Action put additional pressure on NeighborWorks by highlighting that the public has a right to know how hundreds of millions of their tax dollars are being spent and whether their money was going to an organization synonymous with corruption.  Cause of Action Executive Director Dan Epstein celebrated NeighborWorks’ decision to release the reports.  Epstein stated, “I hope they will continue to adhere to the Obama administration’s stated goal of increased government transparency and ethics. The new information provided in these documents further shows the need for the federal government to obey the law and ensure that no affiliate of ACORN, including AHCOA, receives one cent of taxpayer money.”

Documents released this month by the United States Department of Housing and Urban Development show that ACORN affiliate Affordable Housing Centers of America (AHCOA) received over $350,000 in Pennsylvania despite a Congressional ban on funding the organization.  According to a HUD press release, AHCOA received $350,030.64 “to provide counseling assistance relating to mortgage modification, avoiding potential mortgage scams, and assisting victims of scams.”  This comes on the heels of last week’s revelation that AHCOA received $300,000 from HUD in August and an earlier report that AHCOA received almost $80,000 in April.

The Daily Caller’s coverage of FTJ’s efforts at exposing AHCOA and ACORN were covered in a story last week describing HUD’s award of $300,000 and a story today describing the $350,000 award.

In late 2009 Congress prohibited the government from funding ACORN or any ACORN affiliates, subsidiaries or allied organizations.  Not surprisingly, records recently uncovered from the Louisiana Secretary of State show that on January 8, 2010, ACORN simply changed its name to AHCOA.  HUD’s own press release removes any doubt that the Affordable Housing Centers of America (AHCOA) is not distinct from ACORN Housing by stating, “Since 1985, Affordable Housing Centers of America (AHCOA) has been providing housing counseling services to low and moderate and minority communities and fighting housing discrimination.”

The name-change trick apparently worked, because in a September 29, 2010 report, the U.S. Governmental Accountability Office found that AHCOA was not, “as presently configured. . . an affiliate, subsidiary, or allied organization of ACORN,” thus allowing ACORN/AHCOA to continue receiving federal funding.

If Congress does not ask the GAO to review its decision by September 29, 2011, the GAO’s funding determination will become unreviewable.

Freedom Through Justice Foundation Executive Director stated:

It is obvious that the President and his Housing and Urban Development Department are completely ignoring the will of Congress.  Despite clear evidence that ACORN merely changed their name to AHCOA, HUD continues to disingenuously maintain that AHCOA is not an affiliate of ACORN.  HUD’s September 2, 2011 grant is the latest instance of the American taxpayers’ money being improperly steered to an entity with a history of financial mismanagement and corrupt election activities.  In just the past year, AHCOA’s receipts from HUD have gone from $80,000 to $300,000 to $350,000; it’s a matter of time before AHCOA is receiving several million dollars per year of taxpayer dollars.

The Freedom Through Justice Foundation is a 501(c)(3) nonprofit, nonpartisan public interest firm that uses public policy and legal reform strategies to ensure greater transparency in government, protect taxpayer interests and promote social and economic freedoms.  Follow the Foundation via Twitter: @FTJFoundation.

Award Made After Recent House Appropriations Resolution Specifically Banned Federal Funds To AHCOA

The Freedom Through Justice Foundation, a 501(c)(3) nonprofit, nonpartisan public interest group, has found that the U.S. Department of Housing and Urban Development (“HUD”) gave $300,000 on August 11, 2011 to the Affordable Housing Centers of America (AHCOA), which until last year, was ACORN-affiliate ACORN Housing Corporation. HUD believes that AHCOA is not an ACORN-affiliate and relied on a September 29, 2010 U.S. Government Accountability Office (“GAO”) determination that the Affordable Housing Centers of America is not an affiliate or related organization of ACORN. Congress has until September 29, 2011 to appeal this decision before it becomes unreviewable. Last week, the Freedom Through Justice Foundation wrote to NeighborWorks America concerning the importance of its publicly releasing an audit report that may present definitive evidence that AHCOA and ACORN are, in fact, affiliated. The fact that NeighborWorks, in its recent announcement of National Foreclosure Mitigation Counseling (“NFMC”) grant recipients, chose not to fund the previously funded AHCOA, combined with the fact that the June 14, 2011 GAO final report on ACORN’s federal funding cited a report written by the NeighborWorks Office of Special Audit concerning the financial relationship between AHCOA and ACORN, raises the inference that the Office of Special Audit report found AHCOA to be an affiliate or related organization of ACORN. (NeighborWorks, Office of Internal Audit, Special Audit on the Use of National Foreclosure Mitigation Counseling Program Grant Funds by ACORN Housing Corporation, Inc. (Washington, D.C., 2010)). The Office of Inspector General at HUD has already targeted AHCOA as an organization which mismanaged taxpayer dollars and a recent Homeland Security appropriations resolution passed by the U.S. House of Representatives specifically identifies the Affordable Housing Centers of America as an ACORN affiliate that should be barred from federal funding.