Former US president Donald Trump and his company have been sued by New York's Attorney-General for fraud, allegedly padding his net worth by billions of dollars by manipulating the value of assets, including his Mar-a-Lago home. 

"The pattern of fraud and deception that was used by Mr Trump and the Trump Organization for their own financial benefit is astounding," she said.

The lawsuit accused Mr Trump of inflating his net worth by billions of dollars to induce banks to lend money to his company on more favourable, to satisfy continuing loan terms, to coax insurers to provide coverage for higher limits at lower premiums, to gain tax benefits and other purposes.

Ms James said she was referring allegations of criminal wrongdoing to federal prosecutors in Manhattan and the Internal Revenue Service for investigation.

Mr Trump called the move to sue him and his children a political "witch hunt."

In a post on his social media network Truth Social on Wednesday, he also called Ms James, who is black, "a racist" and "a fraud" but did not directly address the allegations of the civil lawsuit.

The lawsuit marks one of the biggest legal blows for Mr Trump since he left office in January 2021. Mr Trump is considering running again for president in 2024.

Ms James said she is seeking to have the defendants give up all the benefits Mr Trump obtained from fraud, estimated at $US250 million ($375 million).

Another of Mr Trump's children, Eric Trump, invoked the right against self-incrimination more than 500 times in a 2020 deposition. 

Among the properties Ms James cited as examples in the lawsuit was Mr Trump's Mar-a-Lago estate in Florida.

She said Mr Trump valued the estate as high as $739 million by pretending it could be developed for residential use, when he knew there were restrictions.

Ms James said Mar-a-Lago should have been valued closer to $75 million.