Cuomo's complaint, filed Thursday in state Supreme Court in Manhattan, charges that BofA hid Merrill's "staggering losses" that had reached $16.2 billion by the time shareholders voted in December 2008 to approve the merger. Following the shareholders' approval, BofA's management then manipulated the federal government by falsely claiming that they would back out of the deal through a clause in the merger agreement unless they received billions of dollars in Troubled Assets Relief Program funds, according to the complaint.

"This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules," Cuomo says in a statement. "In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America's misdeeds."

A BofA spokesman tells GlobeSt.com that the bank is "disappointed" that Cuomo filed the charges, "which we believe are totally without merit. The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations. In fact, the SEC had access to the same evidence" as the New York AG, but reached the conclusion "that there was no basis to enter either a charge of fraud or to charge individuals. The company and these executives will vigorously defend ourselves."