Trump International Hotel in Washington, D.C. (Photo: Diego M. Radzinschi/ALM)

D.C. attorney general Karl Racine sued President Donald Trump's inaugural committee and several Trump businesses Wednesday, alleging the committee improperly used nonprofit funds to book a ballroom at Trump's D.C. hotel during the 2017 inauguration.

In the lawsuit filed in D.C. Superior Court, Racine alleges the Presidential Inaugural Committee violated district law "when it wasted approximately $1 million of charitable funds in overpayment for the use of event space at the Trump Hotel, owned and controlled by the Trump Entities."

The complaint states that former Trump campaign official Rick Gates, a member of the inaugural committee, agreed to pay more than $1 million to rent event space at Trump's D.C. hotel for four days ahead of the inauguration.

That amount was "unreasonable and improperly served to enrich the Trump Entities and its owners for a number of different reasons," according to the filing.

The complaint also alleges that other staff on the inaugural committee "with experience in managing events raised serious concerns about the price" after the Trump Hotel sent its proposal.

The document includes an email that Gates sent to Ivanka Trump, raising concerns about the price.

"First, the cost itself seems quite high compared to other property. Second, I am a bit worried about the optics of PIC paying Trump Hotel a high fee and the media making a big story out of it," Gates wrote, according to the complaint. "Let me know if you have any thoughts and if we can discuss the best path forward."

The complaint also alleges that "the Trump Entities came into possession or control of nonprofit funds that in equity, and good conscience, it should not have received."

Racine is requesting that a D.C. Superior Court judge order the creation of a trust over the $1 million paid by the inaugural committee to the Trump properties, and "[d]irect those funds be restored to a proper public purpose by directing the funds to another nonprofit entity dedicated to promoting civic engagement of the citizens of the United States of America."

In a statement, a spokesperson for Trump Hotels slammed Racine's allegations as "false, intentionally misleading and riddled with inaccuracies."

"The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue," the spokesperson said.

A spokesperson for the inaugural committee also said in a statement that the "facts will show that the PIC operated in compliance with the law and this suit is without merit."

This is not the D.C. attorney general's first lawsuit targeting the president's private business. Racine and Maryland Attorney General Brian Frosh sued Trump in 2017 for allegedly violating the Constitution's emoluments clause by profiting from his D.C. hotel while in office. The U.S. Court of Appeals for the Fourth Circuit heard en banc arguments in the case in December.

Trump's two adult sons, Donald Trump Jr. and Eric Trump, are running the Trump Organization while their father is in office. They announced last year that they are interested in selling the lease to the D.C. hotel, as the company faces several legal challenges over Trump's holding of the property.

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