Former Bank of America CEO charged with fraud (1st Lead)

Feb 4, 2010, 18:08 GMT

New York - Kenneth Lewis, the former chief executive of Bank of America, has been charged with fraud over the firm's controversial takeover of rival Merrill Lynch at the height of the financial crisis, New York Attorney General Andrew Cuomo said Thursday.

The lawsuit alleges that Bank of America's top management purposely concealed massive losses at Merrill from shareholders, in order to get the merger approved at a December 2008 vote.

Lewis then allegedly misled the government into believing the deal needed billions of dollars in taxpayer support to avoid a wholesale collapse of Bank of America.

'Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large,' Cuomo said in a statement.

The lawsuit, filed with the New York State Supreme Court, was brought against Lewis and former chief financial officer Joseph Price and seeks 'monetary relief' stemming from the fraud.

Separately, Bank of America agreed Thursday to pay 150 million dollars to settle two lawsuits brought by the federal government's Securities and Exchange Commission. The SEC's case related to similar charges that the bank failed to disclose bonuses and losses at Merrill.

The Bank of America-Merrill merger was first approved in September 2008 as Wall Street stood on the brink of collapse. The lawsuit alleges Lewis and Price hid from shareholders Merrill's losses of more than 16 billion dollars racked up in October and November.

Those losses meant the merger would put Bank of America itself in danger of collapse and it likely would never have been approved by shareholders in December. Following the vote, Cuomo alleges that Lewis then turned to the government for more than 20 billion dollars in emergency loans.