The lawsuit cites the US constitution’s emoluments clause, which says no federal official should receive a gift or a fee from a foreign government.
The suit – which is the first of its kind filed by government entities – claims Donald Trump is “flagrantly violating the constitution”.
The White House has denied the claims.
The attorneys general for the District of Columbia and Maryland, Karl Racine and Brian Frosh, announced the lawsuit on June 12.
“Never in the history of this country have we had a president with these kinds of extensive business entanglements or a president who refused to adequately distance himself from their holdings,” said Karl Racine.
A non-governmental organization, Citizens for Responsibility and Ethics in Washington (CREW), lodged a similar legal action in January.
On June 9, the Justice Department said those plaintiffs did not suffer in any way and there were no grounds for the suit. The department also said it was unconstitutional to sue the president in his official capacity.
White House press secretary Sean Spicer said on June 12: “The president’s interests, as previously discussed, do not violate the emoluments clause.
“This lawsuit is just another iteration of the case that was filed by that group, Crew, filed actually by the same lawyers. So it’s not hard to conclude that partisan politics may be behind the scene.”
Sean Spicer added: “So we will continue to move to dismiss this case in the normal course of business.”
President Trump is already contending with inquiries by congressional committees and a special prosecutor into his campaign’s alleged links to Russia, which American intelligence agencies accuse of meddling in last November’s US election in a bid to boost support for the property developer.
Since taking office in January, Donald Trump has turned day-to-day control of his real estate empire and other assets over to a trust managed by his adult sons.
However, he has not sold them off as critics said he should do in order to avoid conflicts of interest.
“The emoluments clauses are a firewall against presidential corruption and the one thing we know about President Trump is he understands the value of walls,” Brian Frosh said, referring to Donald Trump’s plan to build a wall along the US-Mexico border.
“This is one he can’t climb over and one he can’t dig underneath.”
The lawsuit will ask for a court injunction blocking Donald Trump from accepting foreign money.
The lawsuit is also seeking to access to his personal tax returns as part of the legal process known as discovery.
A key case in the dispute is Trump International Hotel in Washington DC, just down the road from the White House.
Donald Trump opened the business in 2016 by leasing a large building that used to be a central post office.
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