Sep. 9--The office of New York Attorney General Andrew Cuomo upped the ante in its investigation of Bank of America Corp., accusing the bank of using attorney-client privilege to avoid investigators' questions.

In a letter Tuesday, Cuomo's office said it is close to deciding which, if any, individuals to charge in the investigation of Charlotte-based Bank of America. Essentially, it says that Bank of America has until Monday to decide whether to answer in greater detail certain questions posed by Cuomo's office. Otherwise, Cuomo's office said, it will proceed with the investigation "without giving credit to the advice of counsel defenses."

Bank of America has either declined to answer questions about or not made appropriate disclosures about its knowledge of bonuses and mounting losses at Merrill Lynch, according to Cuomo's office, which is investigating billions of dollars of bonuses rushed out to Merrill employees last year. Bank officials have cited attorney-client privilege as their defense, according to the seven-page letter sent to Bank of America's outside counsel.

Legally, if Bank of America uses "advice of counsel" as its reason for any action, it must waive the attorney-client privilege and tell Cuomo's office what its lawyers said, according to the letter.

Attorney-client privilege "may not be used as both a sword and a shield," wrote David Markowitz, the chief of Cuomo's investor protection bureau.

Bank of America shot back with a tersely worded response, saying it has not asserted the "advice of counsel" defense and has cooperated extensively with Cuomo's investigation.

"Our company has spent thousands of hours and produced hundreds of thousands of pages of documents in response to requests from the New York Attorney General's office," the bank said in a statement. "We have also made our top executives available for interviews on multiple occasions with the New York Attorney General's office."

"The facts belie the New York Attorney General's allegations."

The Cuomo letter comes as a U.S. district judge in New York, Jed Rakoff, is raising similar questions. Rakoff has the power to approve or throw out Bank of America's $33 million settlement with the Securities and Exchange Commission over disclosure of the bonuses. Rakoff has said he wants to know why the SEC accepted the bank's claim that executives relied on lawyers' advice when they issued an allegedly misleading statement. He has asked the bank and the SEC to respond to his questions by today.