New York Attorney General Eric Schneiderman announced a settlement with Yisroel Schulman, former attorney-in-charge at the New York Legal Assistance Group, on Wednesday, following an investigation that revealed the former public defender breached his fiduciary duties to NYLAG and other charities.

Schulman stepped down from NYLAG in 2015 after the launch of a federal investigation into “accounting irregularities” at the nonprofit legal services provider.

While federal charges have so far not materialized against Schulman, state prosecutors say a long-term investigation by the AG's charities bureau led to a complaint, filed in New York County Supreme Court on Wednesday, in tandem with Schulman's settlement deal.

According to the AG's office, Schulman began from at least 1998 diverting at least $2.3 million from the legal aid organization into other charity accounts that required the donor to relinquish control of the funds deposited. While some $1.7 million in funds were ultimately returned to NYLAG, some of the funds were used by Schulman personally, while also serving the purpose, according to the complaint, of “enhanc[ing] his reputation and standing in the community.”

According to the AG's Office, hundreds of thousands of dollars in NYLAG funds were transferred out to other charities. As the controlling person of one of those charities, Schulman wrote a total of nearly $430,000 in checks to himself to repay loans and supposed consulting work he did for the outside charity. The total amount paid for consulting work exceeded his supposed fees by $100,000.

NYLAG monies were funneled into dozens of donor-advised funds and similar quasi-investment accounts with FJC: A Foundation for Philanthropic Funds, which helped Schulman avoid regulatory oversight—and collected interest. This resulted in NYLAG's accounts appearing more depleted than they actually were. The AG's Office said this was intentional, as it helped Schulman in his fundraising efforts.

Schneiderman's office said Schulman breached his duties as an officer by placing funds outside of the financial purview of regulators, and into accounts that prosecutors said jeopardized the safety of those funds. At the point NYLAG learned of his diversions, some $800,000 in funds remained unreturned to the organization.

“Officers have a responsibility to the charities they serve and the donors who entrust them with their contributions,” Schneiderman said. “Today we're making clear that there are consequences when charities are used as personal slush funds.”

As part of his settlement, Schulman admitted to his breach of fiduciary duty, and that he used funds for his own benefit. He agreed to a five-year ban from work in nonprofits, and a $150,000 fine.

Additionally, both NYLAG and FJC entered into letters of agreement with the AG's Office. The groups agreed to enhance their policies and procedures designed to protect their charitable assets.

In a statement, FJC spokesman Timothy Gilles said the organization applauded the AG's actions.

“We were pleased to assist in the investigation and look forward to continuing to work closely with the attorney general and his Charities Bureau to ensure the integrity of the nonprofit sector and the protection of charitable assets in the state of New York,” Gilles said.

In a separate statement, NYLAG director of communications Camilla Jenkins noted that, three years ago when the issue was raised, the organization implemented new procedures to safeguard assets, which will remain in place.

“NYLAG will continue to expand the scope of the legal services we provide to tens of thousands of New Yorkers who rely on NYLAG's dedicated staff and volunteers to protect their interests,” Jenkins said.