AIG seeks to recover more than $10 billion in losses on $28 billion of investments, in possibly the largest mortgage-security-related action filed by a single investor. It claims Bank of America and its Merrill Lynch and Countrywide Financial units misrepresented the quality of mortgages placed in securities and sold to investors, said three people with knowledge of the complaint.

 

AIG, still largely taxpayer-owned as a result of its 2008 government bailout, is among a growing group of investors pursuing lawsuits because they believe banks misled them into buying risky securities during the housing boom. At least 90 suits related to mortgage bonds have been filed, demanding at least $197 billion, according to McCarthy Lawyer Links, a legal consulting firm.

 

AIG is preparing similar suits against Goldman Sachs, JPMorgan Chase, and Deutsche Bank, said the people with knowledge of the complaint.

 

The private actions stand in stark contrast to the few credit crisis cases brought by the Justice Department, which is wrapping up many of its inquiries into big banks without filing any charges. The lack of prosecution - the Justice Department has brought three cases against employees at large financial companies and none against executives at large banks - has left private litigants, mainly investors and consumers, standing more or less alone in trying to hold financial parties accountable.

 

“When federal authorities don’t fulfill their obligation to enforce the law, they essentially give an imprimatur to the financial entities to do whatever they want and disregard the law,’’ said Kathleen C. Engel, a professor at Suffolk University Law School in Boston. “To the extent there are places where shareholders and borrowers can pursue claims, they are really serving the function of the government. They are our private attorneys general.’’

 

The Justice Department said it is vigorously pursuing cases where appropriate. Spokeswoman Alisa Finelli noted that “civil litigation involves a lower standard of proof than is required for a criminal prosecution.’’

 

As it has in similar cases, Bank of America is likely to dispute AIG’s claims in the suit, expected to be filed today in New York state court. Asked about the quality of mortgage bonds issued by companies that are now part of the bank, Lawrence Di Rita, a spokesman for Bank of America, said the disclosures were robust enough for sophisticated investors. He said many of the loans lost value because housing fell.

 

“Now you have a lot of investors and lawyers who are seeking to recoup the losses from an economic downturn,’’ Di Rita said. A spokesman for AIG declined to comment, but the company’s chief executive, Robert H. Benmosche, told shareholders in 2010 that he was considering litigation to recover losses.