Lehman Brothers may have been defrauded out of more than $350 million (£175.8 million) in an alleged Japan-based scam of “epic proportions and sophistication”. Tokyo-based investigators said that the alleged confidence trick, which involved meetings at the headquarters of one of Japan’s most famous corporate names, could have been pulled on many more Japanese and Wall Street investment houses.

Lehman Brothers has already filed a criminal complaint and today plans to sue the Marubeni Corporation over its refusal to pay back the money apparently loaned with its backing to a now-bankrupt fund at the heart of the alleged fraud. Lehman’s exposure, which emerged when the fund failed to make a payment in late February, has triggered two other regulatory inquiries. The Financial Services Agency is understood to be looking into Marubeni’s involvement, while the Securities and Exchange Surveillance Commission has begun investigating the case on suspicion of insider trading by contacts of the alleged fraudsters.

Sources close to the police investigation said that the total scale of the alleged fraud, which is thought to date back several years, could be as high as $1 billion. They told The Times that it could have begun in 2005 and be “among the most bold and devious” operations in recent Japanese history, and that Lehman Brothers’ exposure was likely to be the tip of the iceberg.

According to sources close to the matter, the alleged fraud appears to have involved two employees of Marubeni, who were reportedly dismissed by the global trading house this month. Marubeni, which believes that it may itself also be a victim, said yesterday that it had “no involvement as a company”. It also said that it did not secure the loans in question and that documents to that effect were fake.

According to inside accounts, the Tokyo branch of Lehman Brothers was approached late last year with a proposal that it undertake Y35 billion (£177 million) in bridge financing for a Marubeni-backed contract managed by the Asclepius Fund - itself a unit of a listed company called LTT Bio Pharma. Asclepius, Lehman staff were told, was launching a hospital restruc-turing project with Marubeni and needed bridge financing for the medical equipment. Lehman officials are understood to have met people with Marubeni business cards in the Tokyo headquarters of the company itself.

The contracts at the centre of the case were apparently on Marubeni-headed paper and sealed with the Marubeni corporate “hanko” stamp that makes Japanese deals official. Lehman is believed to have asked to meet the Marubeni general manager involved in backing the contracts, and it now thinks that the person its staff were introduced to was an impostor.

Marubeni said yesterday that it was “absolutely not involved as a company” and that it had no payment obligations because what Lehman believes are forged contract documents include unrealistic interest rates that would not have been its terms. The Asclepius Fund declared bankruptcy on March 19, after it failed to make a Y5 billion payment to Lehman under the allegedly forged contract. Marubeni did not comment on the allegations. It said that it could not supply information about people no longer working for the company.

A Lehman Brothers spokesman said that it was commencing legal action against Marubeni Corporation to seek full repayment of funds it believes to have been fraudulently misappropriated from transactions in which an affiliate provided financing. “The firm is confident in its legal case and fully expects its funds to be repaid.” he said.

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