Donald Trump is back in the headlines this week thanks to a major development in one of the many lawsuits he's facing.

He's now experiencing his biggest legal blow since he left office in 2020.

The former US president, and his adult children, have been sued by the New York Attorney-General –a saga unrelated to the investigation into the January 6 Capitol riots.

Here's what you need to know about Mr Trump's latest challenge, and the status of his various legal woes.

Trump now being sued for fraud

Mr Trump and his company, Trump Organization, 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.

Attorney-General Letitia James has been conducting a civil investigation into Mr Trump's business practices for more than three years – making this the biggest development so far.

Mr Trump's three eldest children, Donald Jr, Ivanka and Eric Trump, were also named as defendants, along with two longtime company executives, Allen Weisselberg and Jeffrey McConney.

Ms James said her office uncovered more than 200 examples of misleading asset valuations, with 23 assets dubbed "grossly and fraudulently inflated."

For example, Ms James said Mr Trump valued his Mar-a-Lago estate as highly 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.

So what does this mean?

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

The lawsuit is seeking to:

• Have the defendants give up all the benefits Mr Trump obtained from fraud, estimated at $US250 million ($375 million)
• Bar Mr Trump and his children from running companies in the state of New York, and to bar the Trump Organization from engaging in real estate transactions

On top of that, a different criminal probe can now continue

In addition to being sued, a US appeals court has ruled that the Justice Department can resume reviewing classified records seized by the FBI from Mr Trump's Florida home.

The FBI last month seized roughly 11,000 documents, including about 100 with classification markings, during a court-authorised search of the Mar-a-Lago estate.

It gives a boost to the criminal investigation into whether the records were mishandled or compromised.