New York’s Attorney General, Barbara Underwood is suing the Trump Foundation, as well as Donald Trump and his children, alleging extensive and persistent lawbreaking.
Barbara Underwood said the charitable foundation had engaged in unlawful political co-ordination designed to influence the 2016 election.
The lawsuit seeks to dissolve the foundation and $2.8m (£2.1m) in restitution.
The foundation denied the charges, calling them politically motivated.
The president hit back at the lawsuit on Twitter, saying “sleazy New York Democrats” were “doing everything they can to sue me”.
He vowed not to settle the case.