The Pelican Post

More than five years and six million dollars later, the “crime cameras” planted around New Orleans have finally yielded their first conviction.   No, the cameras didn’t catch a violent crime where someone’s life or property was in immediate danger.  It was just a run-of-the-mill drug dealer peddling ecstasy pills on a street corner.   Meanwhile, a local civil jury and a federal criminal grand jury are both considering serious allegations concerning the people and institutions  who brought us these cameras.

As a report by the New Orleans Inspector General reveals, the cost of the program over three years was almost three times the original estimate given by the Mayor’s Office of Technology: $6.6 million, rather than $2.4 million.  That’s more than $2 million a year that could have gone to salaries for new police officers or investigators for the District Attorney’s office — real people solving real crimes.

New Orleans’ experience with these cameras is unfortunately rather typical — a 2003 report to Congress by the U.S.  General Accounting Office found little or no evidence of “crime prevention effectiveness of CCTV [closed-circuit television].”  Despite that report, Congress has continued to let the federal Department of Homeland Security disperse grants to state and local agencies for more of the creepy cameras.  In fact, it was such a grant –  for just $1 million — that provided the initial impetus for the New Orleans camera program.

New Orleans, and for that matter all states and localities, would be better off setting their own priorities for law-enforcement  rather than having their preferences massaged by federal agencies with money that is taken ultimately from local taxpayers.

A new story about ACORN’s legal troubles has been posted on our homepage.  Click here to read about the new subpoena and lien.

The brother of ACORN’s founder embezzled $5 million from the organization, nearly five times more than the figure previously acknowledged by the New Orleans activist group’s officials, according to a subpoena served Monday by the Louisiana Attorney General’s Office.

“The exact amount of the embezzlement was unknown until it was recently acknowledged in a board of directors meeting on October 17, 2008 by (ACORN Chief Executive Officer) Bertha Lewis and (ACORN board member) Liz Wolf that an internal review had determined that the amount embezzled was $5,000,000,” reads the court document. “It is still unclear if some of the monies embezzled are from state, federal of private funds.”

ACORN officials have said that Dale Rathke, brother of founder and former CEO Wade Rathke, in 1999 and 2000 inappropriately charged $948,000 to accounts controlled by Citizens Consulting, the bookkeeping arm of ACORN. Under a quiet arrangement known to only a fraction of the organization’s 50-member board, Dale Rathke was allowed to set up a repayment plan. He eventually repaid about $200,000 before a private donor paid the balance.

Attorney General Buddy Caldwell said the statute of limitations for theft from ACORN could present problems. However, the language about the source of the money in the new subpoena hints that ACORN might not be the only victim of the alleged embezzlement and could open new avenues of investigation or prosecution.

Though the debt is paid, the attorney general’s office can still consider whether ACORN or Citizens Consulting intended to defraud the state when it failed to submit employee payroll withholding taxes for nearly six years.

The document says former members of the ACORN board of directors approached state officials with claims that the group was breaking laws “related to the filing of employee withholding taxes, failing to report an embezzlement of nearly $1 million by the brother of the founder…., obstructing justice and violations of the Employee Retirement Security Act.”

The obstruction allegation comes from the failure to report Dale Rathke’s improper charges, and the retirement-account contention refers to the possible illegal use of money in those accounts for ACORN employees.

It seeks myriad financial records dating from 1998 from Citizens Consulting regarding ACORN and all related entities, such as income paid on behalf of all ACORN affiliates, all financial audits and statements, a list of all employees for each related group, notices of tax liens and all tax returns.

The subpoena also focuses on Dale Rathke’s actions, seeking information “detailing the theft of funds by Dale Rathke…and failure to report the theft to the proper law enforcement agencies.” It also demands records “dealing with the issue of Dale Rathke’s illegal use of employee benefit funds” and “records that detail all of the funds received by Dale and Wade Rathke in either income, benefits, use of properties, credit cards or other accounts, loans or other means of deferred compensation.”

Regarding the tax many tax liens filed against ACORN and related groups, the subpoena said that “a substantial portion” of the $306,000 owed was not paid until “bank accounts were levied.”

Records in the Orleans Parish Clerk of Courts Office shows that ACORN-related entities still owe more than $1.5 million in federal taxes, as well as about $30,000 in state taxes. The most recent filing from the IRS was recorded last month for more than $500,000. It makes a claim on the ACORN building on Canal Street until the debt is paid.

Most liens stem from payroll taxes withheld from employees but not submitted to the state or the IRS. The $306,000 bill from the state says payments were missed in 66 tax periods, from 2002 through mid-2008.

The Pelican Institute has obtained a copy of the Inspector General’s review of the 2009 budget process and posted it online.

The OIG report slams the Nagin administration for inaccuracies, a lack of transparency, and a failure to fulfill the city’s charter requirements. In addition, the report claims that the budget appropriates over $309 million in recovery funds without providing an adequate description of their intended uses.

The City has until November 13 to submit an official response.

For two weeks we have been trying to learn more about the contracts between ACORN and the City of New Orleans.  Thus far, there are more questions than answers.  Read our latest report here.