In July and August 2009, conservative activists Hannah Giles and James O'Keefe secretly recorded encounters at ACORN offices in eight cities while presenting a fabricated scenario involving tax evasion, human smuggling, and child prostitution. Videos released through Andrew Breitbart's BigGovernment website from September 10 through November 2009 portrayed several low-level employees as willing to facilitate crimes. Subsequent reviews found that the footage was selectively edited: O'Keefe's professional shirt-and-tie appearance was replaced in promotional segments by staged “pimp” imagery, and key responses were omitted. In San Diego, employee Juan Carlos Vera appeared to offer contacts in Tijuana, but the California attorney general found that he reported the alleged smuggling plan to police.
The publicity produced immediate institutional consequences. The Census Bureau ended ACORN's partnership on September 11, 2009; Congress voted to cut federal funding on September 14 and 17; and the IRS removed ACORN from its volunteer tax-assistance program on September 23. Independent reviews by Proskauer Rose, the Congressional Research Service on December 22, 2009, the Brooklyn district attorney on March 1, 2010, California Attorney General Jerry Brown on April 1, and the GAO on June 14 found no criminal conduct by ACORN staff or mishandling of its $40 million in federal funds, while identifying inappropriate judgment by some workers. Giles and O'Keefe later settled Vera's privacy lawsuit for $50,000 and $100,000 respectively. ACORN's budget fell from $25 million to $4 million, and it filed for Chapter 7 liquidation on November 2, 2010.