By JOHN FUND

On Monday, the U.S. Senate voted 83-7 to strip Acorn, the premier community organizing group on the left, of more than $1.6 million in federal housing money meant to assist low-income people obtain loans and prepare tax forms. This dramatic step followed last Friday's decision by the U.S. Census Bureau to sever its ties with the organization, one of several community groups it was partnering with to conduct the nation's head count.

Both of these actions came after secretly recorded videos involving employees in Acorn's Brooklyn, N.Y., Washington, D.C., Baltimore, Md. and San Bernardino, Calif. offices were televised on Fox News. The videos were recorded by two independent filmmakers who posed as a prostitute and a pimp and said they were planning to import underage women from El Salvador for the sex trade. They asked for and received advice on getting a housing loan and evading federal taxes.

In response, Acorn has so far fired four of the employees seen on the videos. But it claimed the videos were "doctored" and accused critics of a smear campaign and "racist coverage" of the incidents.

Such rhetoric in the past has deflected scrutiny of Acorn tactics, such as street demonstrations and boycotts against banks to force lower credit standards for home loans, which a congressional report found contributed to the subprime loan mess. But now Acorn may be finally running off the rails.

Last week, 11 of its workers were accused by Florida prosecutors of falsifying information on 888 voter registration forms. Last month, Acorn's former Las Vegas, Nev., field director, Christopher Edwards, agreed to testify against the group in a case in which Las Vegas election officials say 48% of the voter registration forms the group turned in were "clearly fraudulent." Acorn itself is charged with 13 counts of illegally using a quota system to compensate workers in an effort to boost the number of registrations. (Acorn has denied wrongdoing in all of these cases.)

A growing number of people once affiliated with Acorn want nothing more to do with the group. Marcel Reid, for example, was one of eight national Acorn board members who were removed last year after demanding an audit of the group's books. She notes that Acorn received $7.4 million in contributions from the Service Employees International Union (SEIU) between 2005 and 2008 but actively fights unionization efforts by its own employees. Ms. Reid also notes that Acorn was sanctioned by the National Labor Relations Board in 2003 for illegally firing workers trying to organize a union.

In 1995, Acorn unsuccessfully sued California to be exempt from the minimum wage, claiming that "the more that Acorn must pay each individual outreach worker . . . the fewer outreach workers it will be able to hire." The decision to file that lawsuit was made by Wade Rathke, who founded Acorn in 1970 and was its long-time leader. He was forced by the group's board to resign last year after it found that he'd engaged in a cover-up of a nearly $1 million embezzlement of Acorn funds by his brother Dale, then the group's chief financial officer.

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Associated Press

An investigator enters the ACORN office in Las Vegas.

Mr. Rathke—now the chief organizer of a New Orleans-based local of the SEIU, a key Acorn ally—is out with a new book, "Citizen Wealth," in which he touts a vision of "maximum eligible participation" by Americans in welfare programs as a way to force radical social change.

Regardless of the wisdom of that vision, it's time to follow the lead of the Census Bureau and cut the government's ties to the highly dubious characters surrounding Acorn. (The group has taken in more than $53 million in direct funding from the federal government since 1994, and substantially more indirectly through states and cities that receive federal block grants.)

Acorn's allies in Congress have long stopped every move to rein it in. Rep. Steve King (R., Iowa), for example, has tried six times to get House floor votes restricting Acorn's access to federal funds but has been blocked by Speaker Nancy Pelosi's hand-picked Rules Committee members. Some Democrats have grumbled. Michigan's John Conyers, chair of the Judiciary Committee, urged a hearing be held on Acorn abuses in March, but later told the Washington Times "the powers that be decided against it."

There is a chance the latest scandals will convince Democrats that Acorn is too toxic a political partner. And President Barack Obama, who once ran a voter-registration program for an Acorn partner (Project Vote) and then worked for Acorn as a lawyer on key cases, has every incentive to distance himself further from the organization.

Former Acorn board members tell me the group has always been confident it will be protected. After the Nevada voter-registration fraud indictment last May, Bonnie Greathouse, Acorn's chief organizer in the state, told the Las Vegas Review-Journal that "we've had bad publicity before" and survived. "People always come forward to our defense. We're just community organizers, just like the president used to be."

Mr. Fund is a columnist for WSJ.com.