Los Angeles City Attorney Rockard Delgadillo, in the suit filed, accused the game publisher of failing to disclose the pornographic content to get the game onto shelves of major retailers that do not carry games rated "Adults Only 18+."

Delgadillo said the company further deceived consumers by first claiming that hackers had modified the original version of the games, then announcing a week later that the sex scenes were written into the original game code.

The lawsuit demands that Take-Two and Rockstar Games, the subsidiary behind "Grand Theft Auto," one of the best-selling in video game franchises history, stop marketing the games to children, pay fines and return million in profits.

Shares of Take-Two plunged 18.4 percent to .90 on the Nasdaq in late morning trade, after earlier hitting an almost three-year low of .68,

A Take-Two spokesman had no comment.

Last summer, the video game ratings board slapped a restrictive "adult" rating on "Grand Theft Auto: San Andreas" because of explicit sex scenes, known as "Hot Coffee," that allow players to engage in virtual sex acts.

The Entertainment Software Ratings Board launched an investigation and took the unusual step of changing the rating on the game to "Adults Only 18+" (AO) from "Mature 17+."

Take-Two had to pull the games off store shelves and repackage them with the new rating, which crimped game sales and disrupted company operations.

Take-Two knowingly deceived the video game ratings board and flouted California law to market the game as suitable for teens, the lawsuit said.

The city also claims that Take-Two "marketed the 'Grand Theft Auto' series in a fashion that encourages the creation of (software modifications), which has added to the counter-culture image of the games, enhancing their popularity and hence their profitability."

The lawsuit asks that Take-Two be ordered to disgorge the profits from the estimated 200,000 copies of the game it sold for about million in California, and that it disclose the sex scenes to customers who purchased "Grand Theft Auto: San Andreas" before the ratings change.

It also demands a ,500 fine for each untrue or misleading statement the company purportedly made about the games.

Consumers in New York already have sued the company over the debacle and are seeking class action status. Take-Two also disclosed in July that the Federal Trade Commission was investigating advertising claims related to the controversial game.