The District of Columbia's attorney general sued President Donald Trump's inaugural committee and companies Wednesday, saying the nonprofit organization "grossly" misused its funds by overpaying for space at Trump's hotel in Washington during his inauguration.

The Trump inaugural committee's decision to pay $1.03 million for event space and food over four days at the Trump International Hotel was "unreasonable and improperly served to enrich" Trump's business, Attorney General Karl Racine's office alleged in its lawsuit.

Racine's complaint says the committee's event planner advised against booking the Trump hotel because it was above market rate. The committee did not consider other bookings at lower rates and paid for the space even when it was not using it, the lawsuit says.

When better offers were made, the committee still used the Trump hotel, violating the committee's purpose "to further the common good and general welfare of the citizens of the United States of America by supporting the activities surrounding the 2017 Presidential inauguration," the lawsuit says.

"District law requires nonprofits to use their funds for their stated public purpose, not to benefit private individuals or companies," Racine said in a statement. "In this case, we are seeking to recover the nonprofit funds that were improperly funneled directly to the Trump family business."

A statement from the Trump hotel dismissed Racine's claims 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 the hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue," the statement said.

In a statement, the inaugural committee called the lawsuit "without merit."

"The facts will show that the PIC operated in compliance with the law," the statement said. "In fact, it reads more like a partisan press release than a legal filing."

The lawsuit is the latest allegation that Trump and his family improperly enrich their businesses through nonprofit and public funds. Trump promised to insulate himself from his business after taking office. Democrats and some states' attorneys general said that he routinely benefits when he uses his office to promote his business and that this violates the Constitution's "Emoluments Clause."

Racine's office sent subpoenas for months related to the investigation. New York and New Jersey authorities also investigated the committee, which raised a record $106.7 million.

D.C. law requires nonprofit groups, such as Trump’s inaugural committee, “to seek out and pay reasonable fair market value for services rendered,” the D.C. lawsuit says.

Racine’s office said Rick Gates, a deputy chairman for the inaugural committee, headed negotiations with the Trump hotel to use the space. Stephanie Winston Wolkoff, an event planner with the inaugural committee, warned Gates, Trump and Ivanka Trump, who worked for the Trump Organization, that the price was too high.

The hotel originally gave the inaugural committee a quote of $3.6 million for eight days of all the event space in the hotel and food. Gates expressed concern to Ivanka Trump about the high cost and said he worried about the "optics" of the committee paying a high fee to the hotel and "the media making a big story out of it."

Gates and Mickael Damelincourt, the hotel's managing director, met and settled on $175,000 per day for the ballroom and separate food and beverage costs. The lawsuit says the committee paid a total of $1,033,757 for all costs for the events.

In an email to Gates and Ivanka Trump, Winston Wolkoff raised concerns over this price, too, saying that "when this is audited, it will become public knowledge." Winston Wolkoff said the rental cost should not exceed $85,000 per day.

Days later, Gates and Damelincourt discussed the inaugural committee booking a majority of the rooms in the hotel. According to the lawsuit, Trump hotel policy and industry standards are to provide event space for free or at reduced rates when a large block of rooms is rented.

Other event spaces offered to charge only a food and drink minimum or reduced rates, including at least two hotels where the inaugural committee also rented a bulk of rooms, the lawsuit says.

The Trump hotel double-booked at a lower rate one of the ballrooms the inaugural committee rented, the lawsuit says.

The Presidential Inaugural Prayer Breakfast paid $5,000 for the Presidential Ballroom when the inaugural committee had been promised the space. The lawsuit says the hotel knew about the double booking but still charged the inaugural committee $175,000 for the partial day.

Gates followed through on plans for a private party for the Trump family at the hotel, costing the inaugural committee more than $300,000, despite concerns raised by the nonprofit group's staff, the lawsuit says.

In an email to Ivanka Trump, Gates said the party Jan. 20, 2017, was "more for you, Don and Eric," the president's two sons.

Gates was sentenced in December to 45 days in jail as part of special counsel Robert Mueller's investigation into Russia's efforts to meddle in the 2016 presidential election. He pleaded guilty to conspiracy and making false statements about his status as a foreign agent, both felonies, and cooperated with prosecutors as part of the investigation.

Racine's office said it seeks to recover the amount paid to the Trump hotel and direct it to "another nonprofit entity dedicated to promoting civic engagement of the citizens of the United States of America."

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