The ebullient former scientist and manager, who is still credited for seeing the drugmaker through its golden years before scandal and malaise won over, is charging the big brokerage with fraud in connection with life-insurance policies he purchased for his four children, The Bridgewater Courier-News reports.

Vagelos, who resides in Far Hills, New Jersey, and retired as Merck ceo and chairman in 1994, filed the suit last week in state court. The author of “The Moral Corporation,” a memoir of his career at the drugmaker, he claims Merrill Lynch “breached its fiduciary and contractual duties” in the management of his assets. The “most egregious” example of Merrill’s “self-enrichment” at his expense involved whole life-insurance policies that were represented to be a safe investment with a rate of return equal to a municipal bond portfolio, according to the suit.

In late 2002, when Vagelos was 72, Thomas Kozlowski, head of Merrill Lynch’s family Office Group, “concocted” a plan where Vagelos bought $276 million of life insurance to be owned by his four adult children, the suit indicates. The annual premiums were $4 million. But in spring 2005, after discovering Kozlowski had an undisclosed interest in an investment he was recommending, Vagelos complained to Kozlowski’s supervisors, who then terminated him, the suit contends.

Merrill investigated the insurance investment and found it “patently unsuitable” but found no other improprieties. Vagelos then commissioned a separate audit of the insurance policies, which found the policies were not “designed for wealth accumulation,” but instead to increase the commissions for Merrill, the suit states. The policy generated millions in commissions for Merrill, but the cash surrender value of the policy would be far less than the premiums Vagelos had paid, the suit contends.

Vagelos paid $16 million in premiums, but the policy had a cash value of $8.5 million, according to the suit, which further characterizes Kozlowski’s advice to Vagelos as “inappropriate, unreliable, fiscally unwise, grossly negligent and fraudulent.” The suit accuses Kozlowski and Merrill of fraud, consumer fraud and fraudulent misrepresentation. Vagelos is being represented by Fred Becker of Wilentz, Goldman and Spitzer.