Marta Mossburg: ACORN lawsuit may be legal nightmare for filmmakers, distributor

ACORN's disrespect for the law is clear. James O'Keefe and Hannah Giles showed why in their series of undercover films. The videos document how employees of the community organizer in offices across the country were willing to help the pair, dressed as a pimp and prostitute, import underage girls from El Salvador for a brothel and subvert tax laws.

The group's complaint filed last week in Baltimore City Circuit Court confirms their contempt for it. Instead of turning inward to clean house, it is attempting to sue those who exposed its fraud for taping conversations without consent in its Baltimore City office and injuring ACORN and its former employees' reputations. That's like Bill Clinton suing the news media for his reputation as a philanderer.

One of the problems with the complaint, ultimately seeking more than $5 million in total damages from O'Keefe, Giles and Andrew Breitbart, who distributed their work, should be that ACORN Housing Corp. Inc. does not have legal standing in Maryland and is not in compliance with the state's law governing charities.

According to the Maryland State Department of Assessments and Taxation, (SDAT) the status of ACORN Housing is "forfeited." That means: "For a Maryland entity, its existence has been ended by the State for some delinquency.

For a non-Maryland entity it means its authority to do business and legal presence here has been terminated." Operating a corporation while "forfeited" is a misdemeanor offense in Maryland.

ACORN Housing identifies its headquarters as New Orleans in one set of documents filed with the state and Chicago in another set. Either way, according to state law, it should not have been operating when O'Keefe and Giles allegedly broke the law and had no "legal presence."

Second, ACORN Housing was and still is not in compliance with the Maryland Solicitations Act according to Rick Morris, director of the charitable organization division of the Maryland Secretary of State.

Alyson Chadwick, communications director for ACORN Housing, said its required 2008 audit is not yet done, but expects it to be ready in a few days. She did not know why the group was late. "I am not a financial expert. ...These things sometimes happen," she said.

Shouldn't ACORN Housing, a group raising $14 million a year in 2007, half from taxpayers, have a clearer understanding of its finances?

University of Maryland School of Law professor Barbara Bezdek, an expert in community development law, said donor and regulatory confidence in an organization makes "getting the audit done incredibly important." She said lots of nonprofits don't prioritize state compliance, but a group that size should "presumably have counsel to help them figure out these details."

To get back to the lawsuit, ACORN Housing didn't file the complaint. The Association of Community Organizations for Reform Now Inc. did. Up until mid September that group also was "forfeited" according to SDAT documents.

It gained good standing a week before filing the lawsuit. But it still owes the Secretary of State's office audits from 2006, 2007 and 2008 and its 2008 federal tax Form 990 in order to be in compliance with the Maryland Solicitations Act.

Matthew Esworthy, a litigation partner with Shapiro Sher Guinot & Sandler in Baltimore said once an organization gets back in good standing with the state it has the right to sue and to defend itself.

But he said that whether ACORN is the proper party in the complaint is irrelevant to whether it goes forward because Tonja Thompson and Shera Williams, two former Baltimore ACORN Housing employees who are also plaintiffs in the case, clearly were impacted by O'Keefe and Giles' taping.

He added, "Any defense lawyer should be concerned about punitive damages in a case like this because they are not dischargeable in bankruptcy." For punitive damages to be awarded, plaintiffs would have to show that O'Keefe and Giles showed an evil motive, an intent to injure or an intent to defraud.

It's not hard to imagine how a sympathetic jury could see O'Keefe's media appearance on Fox in full pimp costume as malicious and the costumes themselves as an obvious attempt to disguise their identities.

How sad that the law could financially ruin three people for speaking truth to power and end up discouraging a generation of young journalists from holding government accountable. But then it's not that surprising when the federal government becomes the main business of the United States of America.