The lawsuit, filed in Waukesha County Circuit Court, adds another layer to the already complex legal fight being waged by targets of the probe that focuses on Gov. Scott Walker's recall campaign and a host of conservative advocacy groups.
U.S. District Judge Rudolph Randa earlier this month sided with Wisconsin Club for Growth in a separate federal lawsuit and ordered the investigation halted, saying it was a violation of the group's free speech rights.
Prosecutors leading the investigation, which began in August 2012, have appealed that decision.
Wisconsin Club for Growth is an independent group that has spent $11.7 million to influence elections in the state for conservatives since 2007, according to the Wisconsin Democracy Campaign, which tracks spending.
The investigation, known as a John Doe, began in secret, but many details about it have since come to light primarily through court filings and Randa's May 7 ruling. In that ruling, Randa said the investigation was looking into Walker's recall committee and "all or nearly all right-of-center groups and individuals in Wisconsin who have engaged in issue advocacy from 2010 to the present."
A spokesman for the Government Accountability Board, the target of the latest lawsuit from Wisconsin Club for Growth and its board member Eric O'Keefe, declined to comment Friday.
The GAB is empowered under state law with enforcing elections, ethics and lobbying laws. Former judges who comprise the nonpartisan board last year voted in secret to authorize the John Doe probe and hired a special investigator. The investigation encompassed five counties.
The lawsuit filed Friday alleges the investigation was an overreach of the board's authority, saying it can only pursue civil violations or campaign laws and refer criminal cases to prosecutors. But the lawsuit alleges GAB illegally continued to pursue and pay for the investigation even after referring it to prosecutors, creating a "Frankenstein monster."
"The result is terrible to behold: a creature that covertly collects sensitive information on political activities that do not - and cannot - constitute a crime, all the while maintaining a nearly impenetrable shield of secrecy," said the lawsuit filed by lead attorney Todd Graves, a former federal prosecutor, in Kansas City.
The lawsuit, which requests a jury trial, alleges that the GAB has spent and continues to illegally spend taxpayer money on the probe and that the rights and procedural safeguards of Wisconsin Club for Growth and O'Keefe have been violated.
The lawsuit seeks an order stopping the GAB from any further involvement in the probe, requiring it to "dismember its Frankenstein monster and conduct only those activities for which it receives taxpayer dollars."
This is the fourth state lawsuit filed in connection with the probe, in addition to the federal lawsuit.
Earlier this week a person close to the investigation told The Associated Press that Walker was speaking with prosecutors about settling the probe, activity that the Wisconsin Club for Growth said in a court filing could violate terms of the judge's order halting the investigation.