New York's crusading Attorney-General Andrew Cuomo is back to what he does best - investigating corporate mismanagement, and this time it's Merrill Lynch that's in his sights. Now, he is accusing executives at the New York brokerage of prematurely awarding $3.6 billion in bonuses late last year, just days before Merrill was taken over by Bank of America Corp.

In a letter addressed to Congressman Barney Frank, Cuomo has charged the brokerage house of giving $1 million to each of nearly 700 employees even as it went under. Cuomo's letter comes as Frank's House of Representatives Financial Services Committee gets set to grill executives from eight banks that received $125 billion from the Treasury last fall.

Merrill executives have drawn fire because they paid 2008 performance bonuses in December, earlier than usual and despite the fact that Merrill had losses of $15.3 billion in the fourth quarter. Bank of America initially received $25 billion from the Treasury and later was forced to seek $20 million more, plus $188 billion in asset guarantees.

Cuomo, who began questioning Wall Street banks about their 2008 bonus plans in October, said in the letter to Frank that Merrill may have taken steps to pay lavish bonuses so that taxpayers would foot the bill. Cuomo has been examining whether Merrill broke securities laws when it paid the bonuses.

''One disturbing question that must be answered is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding,'' Cuomo said in the letter.

''In a surprising fit of corporate irresponsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives,'' Cuomo wrote.

Charlotte-based Bank of America paid $29.1 billion, including $8.6 billion in preferred stock, for Merrill on 1 January. As part of the deal, Bank of America received $20 billion in federal bailout funds to buy the troubled brokerage firm, which lost $15.3 billion in the fourth quarter. (See: Bank of America buys Merrill Lynch)

Merrill, with Bank of America's knowledge, paid $3.6 billion in bonuses for 2008. That's an average of $91,000 per employee, Cuomo said, but the lion's share went to a select group. The top four recipients received a combined $121 million; the next four received a combined $62 million; and the next six received a combined $66 million, according to Cuomo. The top 149 executives received a total of $858 million, and 696 received at least $1 million each, he wrote.

"These payments and their curious timing raise serious questions as to whether the Merrill Lynch and Bank of America boards of directors were derelict in their duties and violated their fiduciary obligations," Cuomo said.

Cuomo's allegations follow his decision to issue subpoenas late last month seeking the testimony of former Merrill Chief Executive John Thain, as well as the testimony of Bank of America Chief Administrative Officer J Steele Alphin. The subpoenas are part of an ongoing inquiry into billions of dollars in bonuses paid by Merrill Lynch late last year just days before Merrill was taken over by Bank of America. (See: Former Merrill boss Thain ousted from Bank of America amid losses)