A Manhattan judge said Thursday he will appoint an independent monitor “to ensure there is no further fraud” at President Trump’s company, restricting its ability to freely make deals, sell assets and change its corporate structure.

Judge Arthur Engoron ordered an outside watchdog as he presides over a lawsuit in which New York’s attorney general alleges Mr. Trump and the Trump Organization misled banks and others about the value of prized assets, including golf courses and hotels bearing his name.

Attorney General Letitia James says the company is continuing to engage in fraud and has taken steps to dodge potential penalties from her lawsuit, such as incorporating a new, similarly named entity — Trump Organization LLC — in September, just before the lawsuit was filed.

Judge Engoron wrote in an 11-page order that Mr. Trump and the Trump Organization “demonstrated propensity to engage in persistent fraud” and that appointing an outside monitor “is the most prudent and narrowly tailored mechanism to ensure there is no further fraud or illegality” pending the resolution of the lawsuit.

Ms. James, a Democrat running for re-election, is seeking $250 million and a permanent ban on Mr. Trump, a Republican, doing business in the state.

Mr. Trump, who contends Ms. James’ investigation of him is a “political witch hunt,” issued a statement Thursday ripping Judge Engoron as her “puppet judge.” He urged the courts to “do the right thing and stop this inquisition.”

Judge Engoron, in agreeing to appoint a monitor, barred the Trump Organization from selling or transferring any noncash assets without giving the court and Ms. James’ office 14 days notice. 

The to-be-named monitor will be charged with ensuring the company’s compliance and will immediately report any violations to the court and lawyers for both sides.

The Trump Organization must also grant the monitor access to its financial statements, asset valuations and other disclosures, must provide a full and accurate description of the company’s structure and must give the monitor at least 30 days notice of any potential restructuring, refinancing or asset sales, Judge Engoron said.

It’s just the latest ruling Judge Engoron has made against Mr. Trump or  his related interests.

While presiding over disputes over subpoenas issued in Ms. James’ investigation, the judge, a Democrat, held Mr. Trump in contempt and fined him $110,000 after he was slow to turn over documents, and he forced him to sit for a deposition. In that testimony, Mr. Trump invoked his Fifth Amendment protection against self-incrimination more than 400 times.

“Today’s decision sets a dangerous precedent for government interference in private enterprise and is an obvious attempt to influence the outcome of the upcoming election,” the Trump Organization said in a statement, calling the move “more political persecution by Letitia James.”

Trump Organization lawyer Christopher Kise said Judge Engoron’s order “effectively seizes control” of the company’s financial affairs and sends a message that “free enterprise is simply not welcome in New York.”

Mr. Trump sued Ms. James in Florida on Wednesday, seeking to block her from having any oversight over the family trust that controls his company. Mr. Trump’s 35-page complaint rehashed some claims from his previously dismissed lawsuit against Ms. James in federal court in New York.