US President Donald Trump has been ordered to shut down his charity and give away the remaining funds amid allegations he used it to further his political career.

The New York Attorney-General (NYAG), Barbara Underwood, alleged the President used the foundation as his “personal checkbook” during the 2016 election, with claims he donated large amounts to veteran organisations before the Iowa caucuses.

“Our petition detailed a shocking pattern of illegality involving the Trump Foundation, including unlawful coordination with the Trump’s presidential campaign, repeated and wilful self-dealing, and much more,” Underwood announced in a statement.

The agreement has resolved one part of Trump’s legal drama, but investigations into his campaign, transition, inauguration and real estate empire will continue.

The suit, filed in June, alleged “persistently illegal conduct” at the charity. Underwood is seeking $US2.8 million in restitution and a 10-year ban for Trump and three of his children – Donald Jr., Eric and Ivanka – from running any charities in New York.

In a New York court filing, Underwood said the foundation has also been ordered to sell its remaining assets and donate the proceedings. This includes two portraits of Trump, which he paid a collective $30,000 in foundation money for.

Alan Futerfas, the Attorney for the Trump Foundation, issued a statement criticising the lawsuit and Underwood for “politicising” the agreement.

“The foundation has been seeking to dissolve and distribute its remaining assets to worthwhile charitable causes since Donald J. Trump’s victory in the 2016 Presidential election,” Futerfas said. “Unfortunately, the NYAG sought to prevent dissolution for almost two years, thereby depriving those most in need.”

Once the judge approves the deal to dissolve the charity, both sides will have 30 days to provide her with a list of not-for-profits that should get the remaining funds. These will be approved by the NYAG and will receive the same amount of money.