New York's attorney general is investigating tax strategies of some of the nation's largest private equity firms, including Bain Capital, founded by Republican presidential nominee Mitt Romney, an official familiar with the probe said Sunday.

Attorney General Eric Schneiderman is examining whether the firms have abused a tax strategy to avoid paying hundreds of millions of dollars in taxes, said the official, who spoke on the condition of anonymity because of the sensitivity of the probe. The practice involves converting some fees collected for managing accounts into fund investments, resulting in a lower tax rate.

Some tax experts who spoke to The New York Times, which first reported the investigation Sunday, believed the strategy was potentially illegal, though other experts said it was commonplace and proper.

The Democratic attorney general sent subpoenas to more than a dozen firms, including Kohlberg Kravis Roberts & Company, TPG Capital, Sun Capital Partners, Apollo Global Management, Silver Lake Partners and Bain Capital, according to the official.

A spokeswoman for Schneiderman declined to comment Sunday.

Bain has been a high-profile target of Democrats as they seek to portray Romney as someone willing to shutter businesses and lay off workers in pursuit of profit. Romney has said lessons he learned at Bain would help him as president to fix the economy and create jobs.

Though Romney collects benefits as a Bain retired partner, the inquiry isn't focused on the time he ran Bain.

The tax strategy of converting management fees into investments producing capital gains can be attractive because capital gains are subject to a federal tax rate of 15 percent, far less than the top rate of 35 percent for ordinary income. The "management fee waiver" strategy is widely used within the industry, the Times reported.

At least $1 billion in accumulated fees that otherwise would have been taxed as ordinary income for Bain executives had been converted into investments producing capital gains, according to Bain financial documents leaked online. Bain partners were able to save more than $200 million in federal income taxes and more than $20 million in Medicare taxes, according to the newspaper.

The attorney general's probe predates the leak of Bain documents.

The Internal Revenue Service has not ruled on whether the waiver strategy complies with tax law, and expert opinion varies.

Victor Fleischer, a University of Colorado law professor, told the newspaper he believed Bain had waived management fees into investments with so little risk that they would not qualify for the capital gains rate if challenged by the IRS. Some tax lawyers argued that the risk involved warrants the lower capital gains rate.

"They're risking their management fee -- they're giving up the right to that management fee in any and all events," said Jack S. Levin, a finance lawyer whose firm has represented Bain.

Though retired, Romney has had investments in some of the funds that documents show used the tax strategy, according to the Times.

The Romney campaign did not immediately comment to The Associated Press. The campaign issued a statement to the Times asserting Romney did not benefit from the practice.

"Investing fee income is a common, accepted and totally legal practice," said R. Bradford Malt, a lawyer who manages Romney's investments and trusts. "However, Governor Romney's retirement agreement did not give the blind trust or him the right to do this, and I can confirm that neither he nor the trust has ever done this, whether before or after he retired from Bain Capital."