President Donald Trump has lashed out at "sleazy New York Democrats" after the state's attorney-general sued him, three of his children and his foundation, saying he used the charity as his "personal chequebook".
Trump vowed he would never settle the case, brought by Attorney-General Barbara Underwood, taking to Twitter to blame the action on "disciples" of former attorney-general Eric Schneiderman, who resigned in May after four women in a magazine article accused him of physical abuse.
"The sleazy New York Democrats, and their now disgraced (and run out of town) A.G. Eric Schneiderman, are doing everything they can to sue me on a foundation that took in $18,800,000 and gave out to charity more money than it took in, $19,200,000. I won't settle this case!" Trump wrote on Twitter.
Underwood on Thursday asked a state judge to dissolve the Donald J Trump Foundation and to ban Trump, his sons Donald Jr and Eric, and his daughter Ivanka from holding leadership roles in New York charities.
The three children joined the foundation's board in 2006, although Ivanka stepped down to work at the White House in 2017.
Underwood charged in the lawsuit that the Trump Foundation engaged in "extensive unlawful political co-ordination" with Trump's 2016 presidential campaign.
The case, filed in the state Supreme Court in Manhattan, followed a 21-month investigation that began on Schneiderman's watch.
She said the foundation engaged in "repeated and wilful self-dealing" to benefit Trump's personal, business and political interests, including a buying a portrait of Trump for $US10,000 at a charity auction and using it to decorate a Trump golf course.
Another $US100,000 went to another charity in 2007 to settle a legal dispute over a flagpole erected in violation of local ordinances at Mar-a-Lago, Trump's private club in Palm Beach, Florida.
An official for the watchdog group Common Cause said the New York investigation provided details of actions that could also violate a federal ban on campaigns funnelling "soft money" through non-profit organisations.
The lawsuit seeks $US2.8 million of restitution plus penalties, a 10-year ban on Trump serving as a director of a New York non-profit and one-year bans for his children.
Trump noted Schneiderman ran the New York campaign for former US senator and secretary of state Hillary Clinton, his Democratic opponent in 2016.
"Schneiderman, who ran the Clinton campaign in New York, never had the guts to bring this ridiculous case, which lingered in their office for almost 2 years," Trump said on Twitter.
"Now he resigned his office in disgrace and his disciples brought it when we would not settle."
The Trump Foundation blasted the suit as "politics at its very worst", saying the charity had spent more than it had received in donations.
Its statement accused the New York attorney-general of holding $US1.7 million in foundation assets "hostage for political gain".