you a copy of lis weiehl's book. hope to see you again next time. and remember, the spin stops right here because we're looking out for you. [captioning made possible by fox news channel] >> day corn. >> acorn. tangled roots. hard-nosed protests. >> all these people come running towards the building. >> voter registration fraud. >> these practices are clearly in violation of nevada law. >> and the undercover tapes that stunned a nation. is acorn about to fall? >> this report has claims of racketeering, fraud and embezzlement, charges that normally would put people in prison. are they going there? >> this hour, stories you haven't heard, interviews you've never seen. >> we asked them for a

significant amount of money. >> including the man who started it all. >> with all due respect, you don't appear to get it. >> megan, i don't have to get it. >> fox news reporting, the truth about acorn. >> hello, i'm megyn kelly. what is acorn and what is it up to? the association of community organizations for reform now says it has more than 400,000 member families and more than 1,200 chapters across the country. it also has hundreds of affiliated organizations, some with global reach. and it is now in the middle of a growing national scandal. in part thanks to explosive undercover videotape widely broadcast over the past weeks. so is acorn as corrupt as critics say, or as dangerous? we start with the man who founded the controversial organization and ran it for 38 years until june of 2008. he has never given an in-depth television interview until now.

>> i would say i'm a dangerous guy, there's no doubt about it. they're right to be worried about me because i do have a small skill set which is i know how to build organizations and they fight for their rights and they win. >> born in wyoming and raised in new orleans, wade rasky entered massachusetts williams college in 1966. he would soon drop out, he says, to organize against the vietnam war. then in 1968, he went to work full time for the national welfare rights organization. >> what was your background that led you to become interested in something like welfare rights? >> i was young and had my eyes opened and listened to what everything i was hearing and couldn't resist being involved and doing something about it. >> you have a mentor at the time or somebody who you -- >> i needed a mentor and in fact probably still do. and welfare rights, the head of welfare rights was dr. george wily at the time.

>> wily was an influential civil rights leader and the man behind the national welfare rights organization. its mission was to organize welfare recipients into a political force and to pressure the government for more and more benefits. rasky said some welfare rights organizers even believed if they added enough people to the welfare rolls, radical, political and economic change would follow. >> i think there was a theory if i could just flood the american welfare system with welfare recipients, you could break the bank, so to speak. >> stanny kerts is a senior fellow at the ethics center and has done extensive research on the national welfare organization and on acorn. >> that would stories the federal government to create a guaranteed minimum income. so it really was a strategy to provoke socialism through a kind of crisis of the welfare state system. they used to flood welfare offices with recipients who would protest and demand more welfare payments. >> their record in the entire

field of welfare in their entire field of human relations is one of colossal and almost complete failure. >> then governor ronald reagan of california felt that the welfare rights organizers were destroying the very lives they claimed to be helping. >> they have tried this raising of people by mass movements. their whole big government approach has institutionalized poverty, perpetuating its degradation until welfare becomes a way of life under the second and third generation of the recipient families. >> and democrat bill clinton would in essence embrace reagan's observations, ending welfare as we know it. rasky laments that development but did tell us by 1970 he came to see wily's welfare rights group as a sinking ship, that the break the bank strategy while an exciting call to arms simply wasn't working and neither was wily's narrow focus on only welfare rights. >> i thought i saw some things

we could do a little differently, maybe a little better and convinced him to let me try this thing acorn. >> rasky said wily agreed to back him only if rasky would try his new ideas in a place where welfare rights needed help. >> welfare rights was trying to impact on wilbur mills who is head of the all powerful ways and means committee and is responsible for welfare legislation and he was from the second district in little rock. so i was willing to live in arkansas. i had never been there before in my life. >> in june of 1970, rasky launched acorn in this brick house in west 15th street in little rock. back then it stood for arkansas community organizations for reform now. rasky never did get chairman mills to deliver on welfare legislation but acorn was to be about much more than welfare anyway. >> we were trying to deal with the whole broad spectrum of low and moderate income families. in the beginning it was just knocking on doors, talking to the people about issues they

cared about in their neighborhoods, whether or not they thought there was an organization they wanted to join with their neighbors and try to solve problems that they saw every day and hadn't been able to figure out a way to get fixed. >> he really made it a multiissue organization so they could protest and demand just about anything that had to do with the reindustry bution of wealth. >> acorn came in as an organization to reform public policy and to redistribute wealth in an equitable way. >> and to support political candidates who would advance those goals, said annie abrams, one of rasky's early organizers. >> acorn was the endorsement many sought. >> is it blatantly socialist? >> not blatantly socialist but de facto socialist. in effect they're socialists without wanting to say so. >> would you describe yourself is a socialist? >> not socialism, what that really means. we're not out advocating for an economic system but advocating for the rights we have a citizen to be fully respected.

the not to -- the moto of of acorn which was taken from the state of arkansas, i won't say it in latin but the people shall rule. we believe in that and may be some of the last that do. >> the rest of the platform said we are the masses of many, not the forces of few. we will continue our fight until the american way is just one way, until we have shared the wealth, until we have won our freedom. sounds awfully socialistic. >> it brings such a smile to my face to hear you read that. convention after convention people would stand up and read that preamble to the platform almost as if it were a prayer or anthem. and there's also a line you haven't gotten to which would sort of poke a hole right in the balloon of whatever the right-wingers say because it talks about having the right to be rich and free. is that socialism? or to talk about citizen wealth, that you would have basic entitlement -- >> sharing the wealth.

>> it says sharing the wealth in there. >> until we have shared the wealth. >> yes, we do believe in equitable distribution of any benefits and rights people have. so yeah, we stand accused of that. we're guilty of believing for people to have a better life in this country. i don't think that's socialism. >> by 1975 he would open acorn brafrpbls in texas and south dakota. by 1980, acorn was in 20 states across the country. by 2008, he had managed to build the vast organization he told us he envisioned right from the very beginning. >> if i could figure out a way to make something happen in arkansas we thought we might make it happen everywhere. >> has acorn been good for america? >> i would say acorn has been pretty rotten for america >> fox news reporting the truth >> fox news reporting the truth about acorn will return right [ominous music]

[screeching] [dejectedly] oh. [screeching] [barks] (man) if you think about it, this is what makes the ladders different from other job-search sites. [screeching] we only work with the big talent. [all coughing] welcome to the ladders-- a premium job site for only $100k-plus jobs and only $100k-plus talent. you know all the little things you do to help the environment? here's one more... ziploc evolve. ♪ an ultra-light bag designed to keep food fresh... made with 25% less plastic.

and made with wind energy. ♪ ziploc evolve. better for the environment. still ziploc fresh. all at no extra cost. designed with you in mind. s.c. johnson. a family company. the odds of winning 6 grammy awards-- 1 in 1.4 million. the odds of having a child diagnosed with autism-- 1 in 150. i'm toni braxton.

learn the signs of autism at autismspeaks.org. megyn: what drives an organization like acorn, a desire to help the poor or a desire to organize radical change in america? and are acorn's efforts even good for the poor, or for that matter for this country? after 38 years in the community organizing business, wade rathke defends his life's work in a new book called "citizen wealth" because he writes, his goal has been to help the poor find a measure of financial security. rathke says acorn took a major step towards that goal seven years after he launched the organization. >> 1977, one of the primary accomplishments over the last 30 years with community organization was the passage of the community reinvestment act. because of that act you're no longer able to red line communities based on income, based on race, based on sex or

creed. the banks were getting all of these deposits of the east end of little rock, for example, and making no loans in that community. there was something wrong. megyn: some of acorn's critics agreed, the c.r.a. had a big impact on the country and they say it led to the greatest economic crisis since the great depression. stanley kertz is one of those critics. >> the community reinvestment act required banks made a lot of loans to people in their immediate vicinity and do in a fair and unbiased way. megyn: sounds like a good thing. >> it is a good thing but acorn abuse those rules and regulations. megyn: abused them he says by making outrageous claims banks were not writing enough loans to low income borrowers, whether they could make the payments or not. megyn: banks rolled over because of pressure? >> right. then we come to the second stage, the banks saying look we'd like to make more risk of the high priced loans but fannie mae and freddie mac won't buy them for us.

megyn: in the late 1980's, lobbyists began pushing for franny and freddie to lower their lending standards and it worked. by the end of the clinton administration about half of the mortgage giants portfolios were risky subprime loans to low and moderate income home buyers >> and that really was the big move that helped to begin this whole subprime loan crisis. megyn: but that was back in the 1990's, how do you connect that to the financial crisis that we've been going through in 2008 and at least the first part of 2009? >> first it was the community reinvestment act and then they pulled in fannie mae and freddie mac and then the capitalists thought let's make some money out of this as long as you're allowing us to do that so there's a share of blame to go around and it never would have gotten to the stage if the original standards for credit were adhered to back in the 1990's. megyn: how do you respond to that charge, wade? >> balderdash. there's no evidence that somehow we convince these huge

multigazillion dollar outfits like fannie mae and freddie mac to jiggle the books so more of our low income people to get in. i almost could say i wish. the real truth is under agreemented directlyly acorn and some organizations you can point to seven million people able to gain homeownership in our community because of passage of that act. >> no doubt some people were helped but a lot of people got mortgages they couldn't really afford and in the end their homes were foreclosed. so how is that helping people? megyn: acorn targeted more than banks and lenders. beginning in the late 1990's, rathke says, acorn began to push for so-called living wage laws now in effect in more than 100 cities nationwide. these laws require employers to pay higher than the minimum wage for low-level jobs. many economists say these laws actually hurt the poor because employers tend to eliminate those jobs instead of paying above market rates. rathke says he doesn't believe

that. but that didn't stop acorn from making exactly that argument when it tried to convince a california court to exempt acorn from paying the minimum wage. the more that acorn must pay each individual outreach worker, acorn argued in a legal brief, the fewer outreach workers it will be able to hire. is that hypocritical? >> in retrospect i wish i had been more on top of that issue and thought what are we doing out there because we absolutely support the minimum wage. megyn: it is not the only time acorn has been accused of hypocrisy and is staunchly pro union but in 2003 when acorn workers in dallas tried to unionize, acorn got slapped by the national labor relations board for improper anti-union tactics. while acorn pressured banks to make subprime loans when real estate shot up in the 1990's, when the bubble burst acorn began filing lawsuits and staging protests over what it called predator lending.

acorn tactics also have been criticized. fox news obtained this cell phone video from march of 2005 when acorn bust more than 100 protesters to the virginia beachhead quarters of liberty tax service. >> out of these buses all these people come running towards the building. megyn: john hewitt is liberty's founder and c.e.o. >> they ran around the building and were yelling and screaming. moye corn's beef, liberty's acorn loans. at interest rates rathke says were predator. police records show the protesters were slapped about over 100 summons. the charge, participating in a riot. rathke admits the demonstration went awry but he says the result was good. hewitt confirms that liberty agreed to explain the loans more clearly and agreed to pay an acorn affiliate about $50,000 a year for three years. rathke says the money was for community outreach. hewitt sees it another way. >> to me it's to stop them from

harassing us. even though i felt dirty by paying them money, i said you know, it's a business decision. megyn: rathke says seven months later a different acorn target came to a different business decision when acorn stormed a meeting of the national paint and coatings association in cleveland. >> that's actually one of our failure stories, if you will. >> we went there with busloads of people and those people went into a room and really frightened the people at the hotel who were having this convention. megyn: acorn organizer marcelle reid was bused in from washington, d.c. that day. she says acorn wanted the paint companies to pay acorn to remove lead paint from poor communities. >> we asked them for a significant amount of money that i had no idea what they were asking for until i was in the meeting. i couldn't carry the meeting on because i just thought this was an outrageous amount of money. megyn: sources told us acorn

demanded more than $30 billion for the work but the paint companies refused to pay. >> we certainly did everything through them but couldn't get them to negotiate. megyn: acorn used similar tactics to silence politicians they didn't like, mark huckabee was set to deliver a civil rights speech in 1988. >> they surrounded not only the outer walls but much to the dismay of the state troopers who were with me, they then mounted the stage. megyn: huckabee said he had to cut his speech short and leave through the backdoor. >> it was a very intense moment and totally unnecessary. >> thank you. megyn: kurtz says one politician acorn liked very much, barack obama with illinois with whom acorn has a long history. >> barack obama worked with acorn on the grounds back when he was a wiff behind the ears organizer in chicago in the mid 1980's and several years later in 1992 when he headed an

organization called project vote in chicago. megyn: mr. obama reportedly helped train acorn organizers and represented acorn in a voter registration lawsuit. the future president served on the board of a charitable foundation that funded acorn to the tune of $190,000. and according to then candidate obama's blog, he told an acorn audience in november of 2007, i've been fighting alongside acorn on issues you care about my entire career. still, the president now downplays his relationship with acorn, suggesting the voter lawsuit was his main connection. you know president obama? >> no, i don't. megyn: never met him? >> i kind of think maybe i was in a line once at a union meeting and may have shaken his hand but not met him in a sense of talking like you and i are talking. you and i are good friends compared to president obama. megyn: do you think his presidency has been good for acorn? >> thus far i think the jury is out. megyn: but perhaps not for long

because there is also a downside to having friends in high places. acorn is being scrutinized like never before. coming up, wade rathke's brother embezzled nearly $1 million. the acorn founder talks about that on camera for the first time after the break. taking its rightful place in a long line of amazing performance machines. this is the new e-coupe. this is mercedes-benz.

megyn: there is much more to acorn than meets the eye. it has a complex network of hundreds of affiliates same say is complicated by design. how many subsidies, affiliates, about, does acorn have? >> there's certainly a huge number, more than 100. so, yeah, it's hard to tell the inventory. the actual operating corporations that form the core of the family of organizations is probably a dozen, less than 20. megyn: of those corporations, the 12 main ones -- >> i should have brought the accountant. megyn: i'm just trying to understand. >> i'm trying to help. megyn: for starters, rathke says, there's the main acorn, it's a nonprofit but not tax exempt so it is allowed to participate in partisanship -- partisan political activities and told us it largely gets its funds from hundreds of thousands of acorn families

that pay $20 a year in dues. acorn affiliates receive money from various sources, charitable donations, state and federal money and payments from companies they've targeted with protests. public and internal acorn documents obtained by fox news indicates acorn has hundreds of related entities, ranging from the living wage resource center to the acorn institute and even two radio stations. it makes for a mind-numbering corporate tangle, some are tax exempt and others not. for instance, project vote is a tax exempt organization. donors get a write-off to support their voter registration efforts but those efforts must be nonpartisan. but another acorn affiliate, citizens services, inc is allowed to engage in partisan activity and according to election records, the obama campaign in 2008 paid citizens services more than $800,000,

most of that to get out the vote efforts. then there's acorn housing corporation, which has received tens of millions of dollars from the federal government, according to congressional estimates. that made americans all the more angry when undercover tapes emerged catching workers in acorn housing offices offering to help set up an illegal brothel. megyn: it's been widely reported they're evaluated with the powerful services employment international union or seiu. rathke denies that affiliation but he was the founder of seiu local 100, active in arkansas, louisiana and texas. and he's been its chief organizer since the 1980's. former acorn board members also tell fox news acorn has received millions from the union and its locals. with all these entanglements many wonder just how separate are the many acorn entities? how do you make sure that the

funds that are supposed to go for nonpolitical purposes go to that acorn entity and the funds that are supposed to go for political purposes that are ok to go for political purposes go to that entity and then the two shall meet? >> you pay an arm and a leg for auditors is basically how you do it. megyn: but this confidential document paints a much more troubling picture. its title, initial report on organizational review prepared by acorn's own lawyers and obtained by fox news, it raises a number of major concerns about acorn's and its affiliates finances and management during rathke's tenure. for example, that staff overlaps in a way that is not appropriate, that acorn lacks the protected walls needed to ensure that partisan and nonpartisan activity are kept sufficiently separate, that acorn is not properly handling federal grant funds and that no one is minding the shop.

it is dated june 19, 2008, not coincidentally two weeks after rathke's last day as acorn's chief organizer. rathke was done in by a financial scandal that began eight years earlier back in 2000. that's when rathke said he learned his brother dale had embezzled almost $1 million from citizens consulting, inc." acorns lawyers called c.c.i. the administrative nerve center. according to the report dale stole $215,000 from acorn beneficial association, a fund for acorn workers. the lawyers report also reports dale also stole from the acorn fund, an employee health care plan. wade claims he and acorn's executive committee decided to, quote, handle the matter internally, opting not to notify the acorn board of directors. >> decisions are made to protect the organization.

it's not like the organization doesn't have a group of enemies out there and had so 10 years ago as well. megyn: wade, why didn't you turn dale in at the time you learned he embezzled that money? >> because we made a decision, the management made a decision that between restitution and retribution that restitution was more in the interest of the organization and that decision was unanimous. megyn: wade confirmed dale signed a promissory note to pay back the money he embezzled and a drummond pike stepped in later to buy the note from acorn. pike confirmed that, too. the money from pike wiped the shortfall from acorn's books that a republican congressional report suggests acorn may have violated federal laws by not reporting the embezzlement to the i.r.s. and by filing bogus reports with the department of labor that concealed the deal. >> i know that in every case the law was obeyed in this situation. do i know everything about the i.r.s., god no, no. >> the lawyer's report

questioned whether acorn's legal counsel may have been affirmatively misled, a charge rathke refused to democracy, -- to address, calling it gross speculation. megyn: did you consult with an attorney? >> we consulted with many attorneys on the situation and got the advice we reacted on based on attorneys' advice. megyn: adding insult to injury, dale kept his job. why didn't you fire him when you found out about the embezzlement, you kept him on the acorn payroll. >> we moved him outside where he had a problem but he actually had worked there for 20 years and it was everyone's equally unanimous view he had a contribution to make. megyn: he embezzled almost $1 million, how do you keep him on payroll? >> i'll quote the president on his book, "dreams from my father." one of the things is it's redemptive. >> he quoted a man who can't protect his brother is not worth a damn. >> marcelle reid was the acorn organizer who began growing

uncomfortable with management after what she considered acorn's overly aggressive actions against paint makers in 2005. by 2008 she was on acorn's national board. reid said she and other board members were outraged when it finally came out they'd been kept in the dark about the rathke's secret financial shenanigans. >> there was a motion made wade be removed from acorn and all its entities. megyn: and the motion carried? >> the motion carried. hoip he was out? he was out. megyn: reid didn't stop there but she and a handful of members suspected more money was missing and that taxpayer and other funds were being commingled in violation of the law. >> what do we want? >> transparency. megyn: they tried to force the full board to open the records at acorn's bookkeeping arm. reid and fellow board member karen inman went to court. megyn: you sued c.c.i. saying let us see the books. next thing you know you get a pink slip from the board and

what was the explanation? >> we vialed -- violated some tenent of the board we weren't wear of. >> bertha lewis who took over for rathke claim reid and inman were removed from the board for, quote, aggressively trying to distract the organization from its core mission. once expelled from acorn's national board it became more difficult for reid and inman to inspect the books. reid now sees a deep hypocrisy in those acorn executives who she says demand less accountability from themselves than they do from the companies they target. >> we can hardly go out on the street and ask other people to do what we ourselves are not willing to do. megyn: coming up, think you heard it all when it comes to acorn's voter registration fraud? think again. @@pppppppp

megyn: when people think of acorn, many think of voter registration fraud.

that's how the organization came into the national spotlight during the 2008 election when acorn workers turned in thousands of phony voter reg sfration -- registration forms and led to many criminal investigations and there's a lot more to that story. >> your bottom line is to reach your voter registration goal whether it's 5,000 or 15,000 registrations but you can't do it alone. >> these vintage training videos obtained by fox news from the wisconsin historical society's acorn collection suggests acorn and its affiliates have been teaching the hard sell of voter registration for decades. >> don't give up. persistence gets results. >> that's what i'm going to do. i'm going to hold my clip board out so you can't get by me. >> when i joined acorn, i learned we could work to get other people elected. >> beulah labostry, the president of the louisiana

chapter of acorn joined the organization 33 years ago. >> i learned about voter registration then and we got just about everybody in new orleans registered. i think we got like 60,000 in that city registered with no problems. >> but now problems are seemingly all you hear about when it comes to acorn's voter registration drives. thousands of registrations rejected by authorities across the country, criminal investigations of the group or its employees in multiple states. dozens of acorn workers reportedly convicted in connection with the organizations voter registration efforts. acorn's national leadership declined our repeated interview requests to discuss these issues. labostrie set with a us alongside wade rathke and echoed acorn's often repeated statement that it's a victim of its own workers. >> naturally you're going to get people to do something they shouldn't do. you know, i don't know how you

could stop that. >> our next witness will be chris edwards. >> ok. >> but acorn's former las vegas field director christopher edwards testified that acorn managers as well as its foot soldiers can be the problem. as part of a plea deal with prosecutors, edwards pled guilty to misdemeanors and is now testifying against acorn and a former acorn official, amy blisfink and is a criminal case in which acorn is charged with felony offenses, 13 counts for compensation of registration for voters as part of its program in its las vegas office known as black jack or 21 bonus. and edwards testified that acorn and its former regional director amy busefink supported the plan. >> she said it was working. >> her lawyers say she was trying to stop it. >> ever recall her of trying to stop the black jack bonus? >> absolutely not. >> acorn denies any wrongdoing

and the attorney says the prosecution has unfairly targeted the organization. but nevada's secretary of state, las miller, a democrat, says what acorn did is not only criminal but also undermines our democratic system. >> i think it starts to strike at the heart of having integrity in the electoral process and something that's important in nevada but should be important to the entire country. >> whatever happens in nevada and elsewhere, acorn's founder, wade rathke is now making a surprising prediction, that acorn, after 38 years, may soon decide it's time to get out of the voter registration business altogether. >> acorn is probably debating whether or not to continue to be involved in voter registration. the damage to the organization by these allegations, true or false, is very, very difficult to manage. megyn: coming up, acorn on capitol hill. >> this report has claims of racketeering, fraud, and embezzlement, charges that normally would put people in prison, are they going there? megyn: that after the break.

[ birds squawking ] [ moos ] [ man announcing ] if you think about it, this is what makes theladders different from other job search sites. we only want the big jobs. welcome to theladders. a premium job site for only $100k+ jobs and only $100k+ talent. you know all the little things you do to help the environment? here's one more... ziploc evolve. ♪ an ultra-light bag designed to keep food fresh... made with 25% less plastic. and made with wind energy. ♪ ziploc evolve. better for the environment. still ziploc fresh. all at no extra cost. designed with you in mind. s.c. johnson. a family company.

megyn: no one seems to be able to say exactly how many taxpayer dollars have been pumped into affiliates over the last 40 years, tens of millions to be sure. but that appears to be chaining. carl cameron reporting from capitol hill. >> during the last election, what organization became notorious, that organization is called acorn. >> i might even stipulate acorn or some of its employees have participated in voter fraud. >> that's something we should tolerate none of. >> when an acorn employee is caught, they accuse the acorn worker. >> to understand the reluctance of some on capitol hill to investigate acorn, it's helpful to watch a remarkable back and forth from last spring. it's between the powerful democratic chairman of the house judiciary committee, john conyers of michigan, and the influential chairman of one of its subcommittees, new york's jerrold nadler, and it came

after scathing testimony given by a republican lawyer who says she sued acorn for voter registration fraud in pennsylvania. >> i would sincerely request that congress investigate these allegations as i've outlined against acorn. >> may i ask the chairman consider such a hearing so we can get to the bottom of this? i mean -- >> let me just say that i will certainly consider a hearing on acorn if i ever hear any credible allegations. >> well, wait a minute. this is a member of the bar here that got a successful partial injunction against acorn. >> the chairman makes a good point and we certainly will consider it. >> that's what all chairmens around here say. i suppose that's pretty instructive and encouraging. >> weeks later conyers confirmed there would be no hearings and his explanation

surprised steve king from iowa. >> chairman conyers announced we wouldn't hold any hearings because the powers that be have decided there will not be an investigation to acorn. >> who was he talking about? >> only two people, either the speaker that would have power over the chairman of the judiciary committee or the president of the united states. >> for the record, a conyers spokesperson said when conyers mentioned the powers that be, he was referring to himself. in other words, he was the one spiking his own investigation. meanwhile, a group of republicans from a different house committee were pushing for their own investigation. their report leveled accusation upon accusation against acorn and its affiliates, including allegations of criminal activity, that acorn is guilty of voter registration fraud on a nationwide scale. that acorn and its affiliates broke tax laws by averting moneys to partisan activities by campaigning to elect candidates and by improper lobbying and by its involvement

with the obama campaign in 2008 and by keeping donor records from the clinton, kerry and obama campaigns with the intent to engage in prohibited communications. the report allegations acorn also broke tax laws when it failed to disclose dale rathke's embezzlement to the i.r.s. and violated employee rights from taking a large amount of money from a health care benefits fund to help the shortfall caused by the embezzlement. the allegations go on for more than 70 pages and conclude by suggesting acorn may be intentionally structured as a criminal enterprise. this report has claims of racketeering, fraud and embezzlement, charges that normally would put people in prison, are they going there? >> no, they're not. >> congressman darrell issa is a member of the committee whose republican staff wrote the report and he released it in july but didn't move congress closer to an investigation of acorn but then came these undercover videos from the website biggovernment.com, shot

in multiple cities they revealed employees of acorn housing, an organization that's received millions of taxpayer dollars, allegedly giving advice on how to cheat the i.r.s., get away with prostitution. >> you're going to get shut down. >> and trafficking in underaged girls. >> you can use them. >> and setting up a brothel in the very community acorn is supposed to be organizing. acorn suggested the tapes were doctored and fired the employees involved and said it was the victim of right-wing attacks but agreed to conduct an internal investigation. nothing acorn said seemed able to stop the erosion of support. the u.s. census bureau and the i.r.s. announced they were cutting ties with them. one of its largest corporate benefactors, bank of america, announced they are suspending their commitments to acorn housing. and the department of justice inspector general, the governors of california, minnesota, and louisiana, the brooklyn new york d.a.'s office and maryland attorney general all announced they were

initiating investigations. maryland's attorney general is also investigating whether the filmmaker broke state laws by making the secret recordings. >> what have we learned the last couple weeks? >> we've learned six months of thoughtful research and 88 pages of truth on real problems with an organization doesn't really give you the kind of results that a salacious video about child prostitution does. >> on september 17, the house voted overwhelmingly 345-75 to stop any more tax money from going to acorn. >> it's been utterly dramatic. i did not believe the house would vote to unfund acorn but they did. that's how much the political wheel has turned in the united states because of the revulsion of the things we saw on television. >> judiciary committee chairman john conyers who previously suggested an acorn investigation and then backed off voted to bar federal funding for the organization. >> it may be that acorn is guilty of various infractions and if so it ought to be

investigated. >> among the 75 democrats who opposed the ban, jerrold nadler who argued it was unconstitutional. >> congress must not be in the business of punishing individual organizations or people without trial. >> this shows you just how deeply important acorn is to some democratic members, that they're willing to make what are laughable statements, and sadly laughable statements about the constitutionality of whether taxpayers money has a right to go to anybody. >> over the last two weeks, the senate also voted overwhelmingly to remove acorn funding from spending bills covering the departments of housing and urban development, interior, and defense. we tried to talk to key democrats in both houses, senate majority leader harry reid, house speaker nancy pelosi as well as representatives nadler and conyers. none would agree to an interview with us on this subject. we also tried to ask the president. the biggest question for him, would he support legislation ending all taxpayer support of acorn? the president did not reply to

our request but he did answer that question for another network. >> frankly, it's not really something i followed closely. i didn't even know acorn was getting a whole lot of federal money. what i know is what i saw on that video was certainly inappropriate. >> i would only say that here in washington when somebody benefits you, your political ideology, typically you come together. when they become an anchor dragging you down, it's good politics to cut them loose, and i think president obama would be smart to recognize that this is now an anchor that could bring him down. megyn: coming up, with acorn in shambles here, wade rathke goes international after the break.

megyn: acorn has now lost its founder to a financial scandal, seen dozens of its workers charged with voter registration fraud, and had novice filmmakers expose certain acorn affiliates willing to help the most immoral of enterprises. as a result, acorn has been banned from working on the next census. it's been stripped of at least some of its federal funding and could face more legal trouble ahead. can the organization survive? i first sat down with wade rathke for more than 2 1/2

hours in new york. that was before the undercover tapes came to light. he agreed to give me a follow-up interview. this time we did it long distance. wade was in new orleans and i was in new york. since we last met, there have been some explosive undercover videos that have surfaced on acorn showing what appears to be acorn workers helping a man and woman posing as a pimp and prostitute with respect to advice on how to avoid tax and other laws. your reaction to those tapes? >> i haven't seen the tapes but i have read about some of the activity. clearly, what lou holtz when i was in arkansas called the do right rule has clearly been broken. megyn: isn't this a disgrace? >> it's painful for me to watch but i'm sure current management and leadership of acorn have addressed this exhaustively at this point. megyn: how do you feel about it as a man who founded this organization and ran it for 38 years. do you see this as the product

of a right-wing conspiracy or do you see this as a problem of acorn workers that acorn needs to address? >> there's definitely some parts of this i find very disturbing, particularly the amazing, unwarranted, i think, congressional attacks that to me seem to go very close to a sort of neomccarthyism. megyn: what do you mean by that? >> i got the sense there was sort of a mass dog pile of people trying to jump on these times when various individual workers had made errors doing whatever the sting might have been. megyn: wade, how can you make that assertion when you've got on these tapes a man and a woman going into an acorn office, not just one, several, and posing as a pimp and a prostitute asking for help to set up not just a brothel, which would be bad enough, but

a brothel that would house underaged girls coming in from el salvador, and you've got acorn workers on the other side not expressing shock or disgust or calling the police, but saying sure, how can i help? >> there's a difference between the action which is deplorable and the reaction which is equally indefensible. but i'm saying no, i have no defense for what the actions have been. there's no excuse for them. they are extremely painful for anyone who has even heard about them, as i have. we can't all of a sudden target organizations or individuals because we don't agree with them or they're impopular or unpopular or come from a different sense of advocacy or political persuasion. that's not the america that we happen to live in. megyn: so acorn is the victim? >> any time any organization or individual has its rights trampled on, we're all victims, megyn. megyn: with all due respect you don't appear to get it, it's

not just that several acorn workers -- >> i don't have to get it. you can talk to current management which is where you need to go to talk about this particular situation. megyn: in fact we did make multiple requests for chief organizer bertha lewis to appear on this program. acorn's response, quote, not a chance in hell. >> we're joined today by acorn's c.e.o., bertha lewis. megyn: he did appear on fox news sunday and admitted she found problems after taking over in june of 2008 but she said she had addressed them. >> since i took over, i have overhauled the entire system and -- >> wait, wait. megyn: she also said she would appoint an outside auditor. >> you say you overhauled the whole system. >> yes. >> there are the videos that happened on your watch. >> those folks were terminated immediately and what did i also do? make sure we have an independent review, make sure that we suspended any walk-in activities so we could review what worked, what didn't work

in instances, those folks were thrown out. megyn: lewis also took a shot at her predecessor, wade rathke. >> i know that back last year we were outraged that the board didn't know about the previous chief organizer's activity. megyn: she said she has had to, and i quote, completely overhaul the finances and all the controls so that things would finally be, quote, aboveboard. why hadn't you done any of that when you were at the helm? >> well, i'm not going to get into some kind of play-by-play of what bertha may have said and what she may find necessary to say these days. but the organization was always audited independently, had high controls, was vetted, you know, continually. megyn: the question of whether acorn properly kept its books, appropriately trained and vetted employees and fully complied with tax laws is an important one but we wondered if an even more important question was whether acorn's

mission and tactics developed over nearly four decades with rathke at the helm led to a sense of lawlessness that permeates this entire organization, rathke resented even the suggestion. >> you're not going to make me wear that shoe. i'm sorry. megyn: in your book you say that acorn workers must aggressively exploit all federal aid programs, no matter what. and i see these workers on this video and i see these people with these phony voter registration frauds and i think they're taking a page out of wade's book, aren't they? >> well, i think that's an interesting conclusion. so somehow you're trying to say i have some responsibility for what's happening on these, you know, secure luss videos? you'll never find in my book i say somehow there's anything whatsoever we should do to support prostitution or whatever else. megyn: is this the end of acorn? >> i'm sure this is not a happy time within acorn but i have total conviction that the

members will drive the organization to greater accomplishments in the future. megyn: whatever the future of acorn, rathke says his organizing days are far from over. yes, he left acorn in 2008, but he kept another position, chief organizer of acorn international, which he's since renamed community organizations international. rathke says it's completely separate from acorn but the idea is certainly the same. from argentina to the dominican republic, to peru, and india, seems the self-described dangerous man has gone global. megyn: you know, wade, the thought of you doing internationally what you've done here in america is going to worry a lot of people. >> just as you said, i'm an organizer and what i know how to do. luckily as long as there are poor people who are desperate to change things that are in their lives they haven't been able to change, there's going to be people who organize. megyn: that's our program. now it's your turn to tell us what you think.

send us an email at fncspecials@foxnews.com and watch dozens of fox news documentaries if you'd like, documentaries if you'd like, the address is www.hulu.com/

here you go. whoa! that's some serious insurance. ding-ding-ding! ding! ding! fun fact -- progressive is the number-one truck insurer. yeah, great service at the right price. and nowadays, my business depends on it.