The investigation was first reported by The Wall Street Journal Thursday afternoon.
Citing conversations with people familiar with the investigation, which is being handled by the US Attorney's office in Manhattan, the Journal reported that prosecutors are also looking into whether the committee accepted donations from individuals looking to gain influence in or access to the new administration.
The newspaper notes that "giving money in exchange for political favors" is illegal, as is misuse of any donated funds. The committee was registered as a nonprofit.
In a statement, Trump's inaugural committee said the celebration was "in full compliance with all applicable laws."
"The (committee) is not aware of any pending investigations and has not been contacted by any prosecutors. We simply have no evidence the investigation exists," the statement read.
"The (committee's) finances were fully audited internally and independently and are fully accounted. Moreover, the inauguration's accounting was provided both to the Federal Election Commission and the IRS in compliance with all laws and regulations. These were funds raised from private individuals and were then spent in accordance with the law and the expectations of the donors. The names of donors were provided to the FEC and have been public for nearly two years and those donors were vetted in accordance with the law and no improprieties have been found regardng the vetting of those donors."
When asked by reporters about the story Thursday, White House press secretary Sarah Sanders said, "That doesn't have anything to do with the President or the first lady. The biggest thing the President did, his engagement in the inauguration, was to come here and raise his hand and take the oath of office. The President was focused on the transition at that time and not on any of the planning for the inauguration."
According to the Journal, sources told the paper that the investigation "partly arises out of materials seized in the federal probe of former Trump lawyer Michael Cohen's business dealings."
During a raid of Cohen's properties last spring, a recorded conversation between him and Stephanie Winston Wolkoff, a former adviser to first lady Melania Trump, was seized, according to the newspaper. Wolkoff expressed concern in the conversation about how the inaugural committee was spending money, a person familiar with the Cohen investigation told the Journal.
Rick Gates, Trump's former campaign aide who has been cooperating with special counsel Robert Mueller's investigation into Russian meddling in the 2016 presidential election, was asked by prosecutors about the committee's spending and its donors, the Journal reported, citing conversations with people close to the matter.
Tom Barrack, a real estate developer who ran the inaugural committee, has not yet spoken with investigators since an interview he had with the special counsel last year, a source familiar with the matter told CNN. During his conversation with Mueller, the inaugural fund was only raised briefly, the source said.
"The inaugural committee hasn't been asked for records or been contacted by prosecutors. We are not aware of any investigation," the source told CNN.
The committee, which CNN previously reported had raised a record-setting $107 million, received much of its funding from wealthy donors who gave $1 million or more, according to the Journal. Some of the fund's top donors, including billionaire Sheldon Adelson, AT&T Inc. (the parent company of CNN) and Boeing Co. are not currently under investigation, the newspaper reported.
This story has been updated.
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