The attorney general of Washington D.C. has filed a lawsuit against Donald Trump’s inaugural committee, alleging an abuse of non-profit funds that ultimately benefited the first family’s private business.

Attorney General Karl Racine said in the lawsuit that the committee was made to “grossly overpay for event space” at the Trump International Hotel in Washington during the president’s inauguration, while failing to seek out cheaper options.

Mr Trump’s inaugural committee funding has been steeped in controversy ever since it was reported to have spent over $100m (£76m) on lavish events — far more than past inaugural budgets — and more than $1m (£761,300) at the Trump hotel.

"District law requires non-profits to use their funds for their stated public purpose, not to benefit private individuals or companies,” the attorney general said when announcing the lawsuit on Wednesday. “In this case, we are seeking to recover the nonprofit funds that were improperly funnelled directly to the Trump family business.”

Mr Trump's inaugural committee has maintained that its finances were independently audited, and that all money was spent in accordance with the law.

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The suit alleges that the committee knew it was overpaying, but didn’t consider less expensive alternatives.

Prosecutors found that Rick Gates, a former Trump campaign aide who flipped on the president during the special counsel’s Russia investigation, personally managed discussions with the hotel about using the space, including ballrooms and meeting rooms.

One of the event’s planners raised concerns about pricing with Mr Trump, Mr Gates and Ivanka Trump, according to the lawsuit. Ms Trump is the president’s daughter and a senior White House adviser.

Those concerns included a written warning that the price proposal was at least twice the market rate. But Gates went through with it anyway, at a cost of $1.03m (£763,448), the suit says.

Mr Gates pleaded guilty to charges tied to his lucrative political consulting work in Ukraine and was sentenced last month to 45 days in prison, a punishment that a judge said reflected the extensive cooperation Mr Gates had provided to the Justice Department.

A lawyer who represented Mr Gates for the criminal proceedings didn’t immediately return a message seeking comment. The White House didn’t immediately return a message, nor did the Trump Organisation.

The suit contends that the hotel went against industry practice and refused to discount the space, and double-booked its largest ballroom with a different organisation that was still affiliated with the inauguration, the Presidential Inaugural Prayer Breakfast. Both organisations were nonprofits, but the breakfast paid $5,000 (£3,806) for the ballroom. The committee, however, paid $175,000 (£133,214), the suit claims.

Prosecutors say the committee also used nonprofit funds to throw a private party on Jan. 17, 2017, the night off the inauguration, for Mr Trump’s family — a $300,000 (£228,000) affair. The reception was for three of Trump’s children — Donald, Jr, Ivanka, and Eric.