The federal Second Circuit Court of Appeals in Manhattan overturned a lower-court ruling that said the move violated the Constitution by punishing ACORN without a trial.
"Despite that evidence of punitive intent on the part of some members of Congress...there is no congressional finding of guilt in this case," the three-judge panel ruled.
"Here, at most, there is the 'smattering' of legislators' opinions regarding ACORN's guilt of fraud."
But the appeals court also sent the case back to Brooklyn federal Judge Nina Gershon to consider ACORN's claims its free-speech and due-process rights were violated.
Congress cut off funding for ACORN last year after conservative activists used a hidden camera to record workers offering advice on how to set up a proposed prostitution business.
A Congressional report said the group had received $53 million in taxpayer money since 1994. Full story
