Donor Who Bailed Out Rathkes Identified as Foundation Head

The unfolding financial scandal at the Association of Community Organizations for Reform Now, or ACORN, has taken a new turn.  ACORN, based in New Orleans, never wanted known the identity of the person who assumed responsibility for a promissory note of nearly $740,000, a sum representing the remaining balance of the roughly $950,000 embezzled from ACORN’s coffers nearly a decade ago.  But thanks to some digging by San Francisco Chronicle reporter Henry K. Lee, the identity of the person is now known:  Drummond Pike, founder and chief executive of the Tides Foundation, a San Francisco-based philanthropy well-known in progressive circles.  The case is significant for organized labor because ACORN founder and chief organizer Wade Rathke is the founder and chief organizer of Local 100 (Arkansas, Louisiana and Texas) of the Service Employees International Union.  In addition, SEIU Local 880, based in the Midwest, operates as an adjunct of ACORN.  Three months ago, he resigned from his post over the scandal. 


Union Corruption Update recently reported that Dale Rathke, Wade Rathke’s brother, stepped down in the wake of revelations that during 1999-2000, while serving as ACORN’s chief financial officer, he transferred $948,507.50 from ACORN to Citizens Consulting, Inc.  The balance transfer, by all accounts theft by any other name, was carried for years on CCI’s books as a loan.  ACORN executives at the time declined to notify authorities, preferring to negotiate a promissory note with the Rathke family to pay off the balance.  By this year, $210,000 had been repaid – seven $30,000 installments.  The scandal had been hushed up until a disgruntled ACORN employee (and possibly ex-employee) blew the whistle several months ago.  In the aftermath, Wade Rathke departed and the nonprofit network secured an agreement from an unnamed donor to assume payments. 


The Tides Foundation, founded in 1976, from the start has been a major funding source of Left-leaning organizations throughout the U.S.  Since 2000 alone, Tides has provided more than $400 million to nonprofit groups, much of it through donor-controlled accounts.  Drummond Pike has a personal stake in pulling ACORN’s chestnuts out of the fire; Wade Rathke long had been a member of the Tides Foundation and various Tides-related organizations.  John A. Powell, chairman of the Tides Network, emphasized Pike personally bought the note independently of Tides accounts. 


Pike had demanded anonymity, noting in e-mail messages, “As a rule, I do not comment on my personal finances.”  Indeed, ACORN had signed a confidentiality pledge.  But his identity was confirmed through examination of internal ACORN e-mails.  The group’s top executives had sent messages to each other discussing ways to keep Pike’s identity secret, which by then was becoming common knowledge anyway.  “Does Drummond know the word is out?” asked ACORN Executive Director Steven Kest in a July 4 transmission.  In a July 12 e-mail message to Kest, ACORN’s political director, Zach Pollett, wrote:  “I talked to Drummond on this yesterday and had Beth Kingsley (ACORN’s lawyer) prepare a ‘keep your yaps shut’ confidentiality memo to people at ACORN and CCI.”  Thanks to these and other persons connected to ACORN, all signs pointed to Pike.         

While the Tides Foundation was cleaning up ACORN’s scandal, it’s been grappling lately with one of its own.  On August 19, a federal grand jury handed down an indictment against Jason Ramon Sanders, 37, on charges that he stole more than $132,600 from February 2005 to March 2008.  The indictment followed a March audit.  Sanders had served as philanthropic adviser to the foundation until his firing.  “Within two days of being discovered the malfeasance was confirmed, the employee was dismissed and a police report was filed,” said Brian Byrnes, Tides Foundation managing director.  Here, at least, management has acted decisively against internal corruption.  (New York Times, 8/17/08; San Francisco Chronicle, 8/21/08).