The New York Attorney General has shut down the National Children's Leukemia Foundation, after an investigation revealed the crooked founder had been pocketing nearly $1million a year while only spending 1 per cent of donations to help children struggling with cancer

National Children's Leukemia Foundation founder Zvi 'Steve' Shor has been running the charity out of his basement in Brooklyn, New York, masquerading the non-profit as a large organization in order to solicit some $13million in donations since 2009, according to court papers filed Monday by the attorney general.

While the foundation claims to operate a bone marrow registry and fulfill the dying wishes of terminally ill children, authorities claim the charity has only put 1 per cent of its donations towards charitable causes while Shor has pocketed up to $1million for himself and his family, nothing is more shameful than pocketing millions of dollars donated by good-hearted people who just wanted to help children afflicted with a terminal illness,' New York Attorney General Eric Schneiderman said in the statement, after successfully winning a court order to shut the sham organization down. 

Shor started the charity in 1991, following the death of his son from leukemia. 

He then continued to run the charity from his basement, raising $13million between April 2009 and March 2013. 

According to court papers, $7.5million of that money was paid to fundraising companies who organized events for the charity. During this period, Shor was also paying himself a $600,000 salary while sending an additional $655,000 to a 'shell organization in Israel' run by his sister 'allegedly for research purposes'. 

The organization has also been accused of faking audit reports, when no audits were conducted. 

Shor ran the organization as president until 2010, when he was replaced by accountant and auditor Yehuda Gutwein when it was revealed that Shor had been convicted of bank fraud in 1999. 

In addition to Shor, the other charity organizations named in the suit include Gutwein, Shor's son Shlomo Shor and Shlomo Donn. Shor has fiercely denied the allegations that he was running a scam foundation in a statement to ABC news  

'Our small organization helped many families over the past 20 years. I launched NCLF after the death of my teenage son to leukemia. I personally took no salary for over eight years. I wanted to help as many families as I could who had children suffering from cancer.

'We feel we are being used as an "example" due to the telemarketing fundraising laws and fundraising market over which we have no control. Our fundraising contracts were all filed with the attorney general who has long known their terms. We expect to be vindicated in court when the full story is explained,' Shor said.