Even in retirement, former Bank of America CEO Ken Lewis can’t escape the consequences of the deal that may have defined his career for the worse.

The former CEO Lewis, former CFO Ken Price, and the bank itself will face a civil securities fraud lawsuit filed by New York Attorney General Andrew Cuomo. The news comes as the bank has reportedly settled SEC civil charges arising from the deal to buy Merrill Lynch at the height of the credit meltdown.

Cuomo alleges Lewis and Price duped shareholders and the federal government into going along with the Merrill deal.

"We believe bank management understated the Merrill Lynch losses to shareholders to get shareholders to approve the deal then overstated their ability to terminate the agreement to get $20 billion from federal government," Cuomo said on a conference call, the Wall Street Journal reports.

The bank called the charges unfortunate and said it would vigorously defend against them. It also defended Lewis and Price, saying they acted to fulfill their fiduciary obligations.

"In fact, the SEC had access to the same evidence as the NYAG and concluded 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," the bank said.

Lewis' lawyer, Mary Jo White of Debevoise & Plimpton, echoed some of the same themes.

"The decision by Mr. Cuomo to sue Bank of America, Mr. Lewis, and other executives in connection with BofA's acquisition of Merrill Lynch is a badly misguided decision without support in the facts or the law. As the SEC correctly concluded recently based on the very same evidence, there simply is no basis for any case against Mr. Lewis or any other individual. There is not a shred of objective evidence to support the allegations by the attorney general. Mr. Lewis and other BofA employees acted in good faith in the Menill Lynch transaction, following the expert legal advice of counsel, and in the best interests of BofA shareholders," she said.

Lewis, in a career-defining move, decided to buy Merrill as the collapse of Lehman Brothers led to a market meltdown in 2008. But he was dogged by that decision later.

For the last year of his term, he increasingly faced questions about what he knew about monstrous Merrill losses, and the amount of pressure he was under from the government to go through with the deal rather than let another big investment bank fail.

Lewis finally chose to retire at the end of last year, under a cloud of accusations that he wasn’t transparent with shareholders about Merrill losses and bonuses before their final vote to approve the merger.

But retirement hasn’t let him off the hook, apparently.

“This merger is a classic example of how the actions of our nation’s largest financial institutions led to the near collapse of our financial system,” said Cuomo in a statement released this morning. “Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large. This was an arrogant scheme hatched by the bank’s top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud, and American taxpayers ended up paying billions for Bank of America’s misdeeds.”

Cuomo alleges that Lewis and Price knew about $16 billion in losses at Merrill reported on the day of the merger vote, but decided not to share that information with shareholders.

Lewis has said he was under pressure from the Secretary of Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke to get the deal done, lest another investment bank go down the tubes, further exacerbating the financial crisis.

But doing the deal with the increased losses at Merrill forced Bank of America to take on an additional $20 billion in taxpayer aid, money the bank has now paid back to the government.

In its statement, the attorney general’s office argues: “In the process of acquiring Merrill Lynch, Bank of America’s management intentionally misled its shareholders, its Board of Directors, its lawyers, and United States taxpayers. The lawsuit filed today in New York State Supreme Court seeks monetary relief and injunctions from Bank of America, Lewis, and Price.”

While Cuomo was going forward with his suit, the bank was moving to settle its dispute with the Securities and Exchange Commission over the deal.

CNBC reports that the SEC has filed a motion in federal court seeking to dismiss its charges against the bank in return for $150 million from Bank of America. Judge Jed S. Raskoff, who rejected an earlier settlement, will have to approve this attempt.

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Kent Bernhard Jr. is News Editor of Portfolio.com