Children’s Leukemia charity sued for $9.7 million in fraud

© Rodrigo Garrido
A national children’s cancer foundation is being sued for fraud after the New York attorney general’s office discovered it spent most of its $9.7 million funds on fundraiser’s salaries rather than patient care.

The National Children’s Leukemia Foundation is alleged in the lawsuit to have raised $9.7 million from businesses and families across America between 2009 and 2013. Court papers said of the $8.9 million solicited from donors, $7.5 million, or 83 percent, went to pay professional fundraisers hired by the foundation’s founder, Zvi Shor.

Of the remaining funds, the organization spent less than 1 percent, or $57,541, of its income on direct cash assistance to leukemia patients.

The two-decade-old organization, run from a Brooklyn basement, failed to spend money on programs it touted to donors such as the registry for searches for bone morrow donors.

It also lied to potential donor that the money would be used to “fulfill wishes of terminally sick children,” such as going to Disney World.

The foundation also falsified audit reports when none had been conducted, and lied that large portions of its fundraising expenses were spent on public education about cancer.

Other details show that Zvi Shor, 64, a convicted felon and the foundation’s founder, ran the charity out of his home, paid himself an annual salary of nearly $600,000, with another $600,000 in deferred compensation, plus more than $100,000 towards a pension.

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Another charge showed the foundation transferred five percent of its funding, or $655,000, to a shell organization in Israel run by Shor’s sister, allegedly for research purposes.

The investigation led to the New York Attorney General’s office announcing on Tuesday that it was filing a court action to close down the foundation, try and retrieve the funds, and hold accountable its founder, its vice president, who is the founder’s son, and its auditor accountable.

"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 statement.

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In other complaints the foundation was found to have lied about an umbilical cord banking program, its own cancer research center, and new life saving treatments, because none of them existed.

The investigation into The National Children’s Leukemia Foundation began afrer a state report “Pennies for Charities,” showed that a tiny fraction of donations raised by many professional fundraisers actually went to the charitable causes donors intended to support.

The foundation was stripped of its registration in January 2014 as the investigation developed.

"Those charitable organizations that do help our most vulnerable citizens, and put donors' money to its intended use, are an essential part of the fabric of our state," said Schneiderman, who urged donors to give but "give wisely."