New York's attorney general claims President Donald Trump's foundation served as a personal piggy bank for his businesses, legal bills and presidential campaign.
The lawsuit alleges illegal activity that took place over more than a decade, including "extensive unlawful political coordination with the Trump presidential campaign, repeated and willful self-dealing transactions to benefit Mr. Trump's personal and business interests, and violations of basic legal obligations for non-profit foundations".
The attorney general's office seeks to dissolve the foundation and asks for $2.8 million in restitution.
Also named in the suit were Mr Trump's children, Ivanka, Eric, and Donald Jr.
NY state began investigating the Trump Foundation in response to a probe by The Washington Post. He promised to shut it down in 2016 but could not while the NY investigation was ongoing.
The Trump Foundation also attacked the attorney general's office and said it was playing "politics at its very worst". I won't settle this case!,' he wrote.
Prosecutors charge Trump with repeatedly misusing the nonprofit to pay off his businesses' creditors, to decorate one of his golf clubs and to stage a multimillion dollar giveaway at his 2016 campaign events.
"The foundation was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization", Underwood said in a 41-page complaint filed in NY state court in Manhattan.
Trump has already paid more than $330,000 in reimbursements and penalty taxes, Underwood said in the suit. She's seeking to ban Trump from serving as a director of a NY not-for-profit for 10 years.
Nevertheless, as NY attorney general Ms Underwood has significant investigatory and prosecutorial power - and if she starts flushing the bushes of some of Mr Trump's more questionable charitable activities, there's no telling what she might turn up.
Underwood also sent referral letters to the Internal Revenue Service and the Federal Election Commission for further action.
The foundation's mission says its funds are to be used "exclusively for charitable, religious, scientific, literary or educational purposes", either directly or through other organizations, according to the court filing.