This is the shady Trump fundraiser that unleashed an avalanche of new legal trouble for his family
Donald Trump speaks during a campaign rally raising funds for US military veterans at Drake University in Des Moines, Iowa (AFP Photo/William Edwards)

President Donald Trump and his three eldest children broke the law by using their charitable foundation as a slush fund, according to a new lawsuit filed by the New York attorney general.

The investigation appears to have been prompted by reporting by the Washington Post's David Fahrenthold, who won a Pulitzer Prize for digging into alleged payouts by the Trump Organization.

Specifically, state attorney general Barbara Underwood identified a Jan. 28, 2016, fundraiser Trump held in Des Moines, Iowa, while skipping a Republican primary debate.

Trump promised to donate $1 million to veterans organizations after the fundraiser, and Fahrenthold began looking into the charity after finding no evidence to show the payment was ever made.

Emails show the Trump campaign dictated donations by the charity despite a ban on political activity by non-profit organizations.

Underwood's suit also claims the Trump Foundation improperly directed donations to personal and business ventures by the president and his family.

"These include a $100K payment to settle legal claims against Mr. Trump’s Mar-A-Lago resort, $158K to settle legal claims against Trump National Golf Club, and $10K to purchase a painting of Mr. Trump displayed at the Trump National Doral," the suit claims.

The attorney general has asked the IRS an FEC to open investigations into possible violations of federal law by the president and his family.