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April 10, 2014

Charity Fundraising Giant ACS Files for Chapter 11 Bankruptcy

Associated Community Services, one of the country's biggest charity telemarketers and the target of investigations in multiple states over its fundraising methods, has filed for Chapter 11 bankruptcy, reports the Detroit Free Press.

Southfield, Mich.-based ACS will stay in business but is seeking bankruptcy protection due to "a variety of financial factors, including legacy business costs and cash-flow constraints," Richard Cole, the for-profit firm's president and co-owner, said Wednesday. The company listed 39 creditors in court documents, including the Internal Revenue Service, to which it owes $15.5-million.

ACS keeps up to 90 percent of the money it raises for nonprofits, according to the Free Press. The firm has faced investigations and legal action in Michigan, Iowa, and Oregon over solicitation tactics critics and regulators claim are misleading and target the elderly. Earlier this year the company agreed to pay $45,000 to settle hundreds of violations alleged by the Michigan Attorney General's office, but it denied using deceptive practices.