Updated 6.57pm with details.

Donald Trump and family members lied to lenders and insurers for years, variously inflating and deflating his worth by billions for tax purposes, according to a suit filed by New York state's attorney general on Wednesday.

Top state prosecutor Letitia James said that with the help of his children and others at the Trump organization, the former president gave fraudulent statements of his net worth "to obtain and satisfy loans, get insurance benefits, and pay lower taxes."

"In short, he lied to gain massive financial benefits for himself."

The investigation is one of many criminal, civil and congressional probes into Trump, who is eyeing another run for the White House in 2024.

A Trump spokesperson denounced the civil suit as a political act by Democrats against the Republican businessman.

"A tale of two justice systems -- yes where criminals go free, and the Democrats only go after their political opponents!" Liz Harrington wrote on Trump's online platform Truth Social.

James' office requested that the former president pay at least $250 million in penalties, and that his family be banned from running businesses in the state. 

She also urged that Trump along with his children Donald Trump Jr, Eric Trump and Ivanka Trump be barred from purchasing property in the state for five years.

- 'False' property values -

James said her office, which lacks the authority to file criminal charges, was making a criminal referral to the US Justice Department based on the three-year investigation.

The lawsuit filed with the New York State Supreme Court includes allegations that Trump's annual financial statements for at least a decade "grossly inflated" property values across his assets -- from Mar-a-Lago in Florida to Manhattan's Trump Tower -- to a "staggering" degree.

He did so to obtain favorable loans with lower interests and premiums, said James, who is running for re-election.

The suit details how Trump and his associates would represent that he had cash on hand when he didn't, change valuation properties wildly, and that he used "objectively false numbers to calculate property values" including at his famous triplex on Fifth Avenue.

"White collar financial crime is not a victimless crime," James said.

"When the well-connected break the law to take in more money than they are entitled to, it reduces resources available to working people, to regular people, to small businesses and to all tax payers."

James' lawsuit requests that a judge appoint an independent authority to monitor the Trump Organization's financial practices, and remove the Trumps from their own family business.