Congress Has Power to|Halt ACORN Funding

(CN) - Congress had the authority to block federal funding for the activist group ACORN based on reports of "widespread mismanagement," the 2nd Circuit ruled.

"Although the appropriations laws may have the effect of alienating ACORN and its affiliates from their supporters, Congress must have the authority to suspend federal funds to an organization that has admitted to significant mismanagement," Circuit Judge Roger Miner wrote.

The Manhattan-based appeals court overturned a Brooklyn judge's ruling that the funding cut was unconstitutional because it effectively punished ACORN without an investigation or trial.

The 2nd Circuit had temporarily reinstated the ban on federal ACORN funding in April, pending appeal.

Lawmakers cut off ACORN in a stop-gap spending bill last October and then excluded the organization from an appropriations bill for fiscal year 2010.

ACORN, or the Association for Community Organizations for Reform Now, came under public scrutiny after a whistleblower revealed that the founder's brother had embezzled nearly $1 million from the organization. ACORN executives had allegedly agreed to let him repay the money quietly, as part of a confidential agreement.

ACORN was also accused of engaging in voter registration fraud and using charitable donations for political purposes. A new scandal surfaced last summer, when "hidden camera" videos purportedly showed ACORN volunteers and employees offering advice on a proposed prostitution business.

Though an independent investigation found the videos to be heavily edited, "manipulated" and "distorted," it criticized ACORN's "organizational and supervisory weakness."

That's when Congress chose to block federal funding.

ACORN claimed it had been "penalized by Congress without an investigation," but the 2nd Circuit disagreed.

"Congress's response is not so out of proportion to its purported non-punitive goal of protecting public funds from future fraud and waste as to render the funding bans punitive in nature," Judge Miner wrote.

"In sum, the plaintiffs have failed to show that the appropriations laws constitute 'punishment' under the functional test."

The court remanded for the lower court to decide if the federal funding ban violates ACORN's due process and First Amendment rights, which the federal judge has not yet addressed.

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