Hilton Worldwide, the American hotel behemoth, could face criminal charges of corporate spying, on top of a civil case brought by its rival Starwood Hotels & Resorts.

It emerged that a federal grand jury is investigating the company and several of its former executives over claims that they engaged in the “wholesale looting” of confidential documents in order to help it to launch a rival brand to Starwood’s W Hotels. The investigation is being conducted as part of a Department of Justice inquiry into the allegations made by Starwood in a civil case in April.

The grand jury will review the evidence from the investigation, which is being handled by the US attorney’s office in Manhattan, and will determine whether there is a criminal case to answer.

According to The Wall Street Journal, prosecutors are considering “an aggressive approach” to the case, which could involve bringing criminal charges against both the hotel chain and the executives involved.

It is expected to reach a conclusion within two months.

Hilton which is controlled by Blackstone, the private equity firm, said that it was co-operating fully with the US attorney’s office. It previously had dismissed Starwood’s civil suit as being “without merit”.

The spying scandal is an unwanted distraction for Hilton executives as they try to meet ambitious targets set by Blackstone after its top-of-the market $26 billion acquisition of the company two years ago.

Starwood’s civil lawsuit, filed in the US District Court for the Southern District of New York, alleges that two executives — Ross Klein and Amar Lalvani — who had defected from Starwood to run Hilton’s luxury and lifestyle brands division, “stole massive amounts of proprietary and highly confidential Starwood information”.

It alleges that this information “was used to expedite Hilton’s entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so”.

The suit claims that Mr Klein and Mr Lalvani “directly and through other Starwood luxury brands employees they recruited to Hilton, stole more than 100,000 electronic files before and after they joined Hilton”. It adds that confidential information on Starwood’s successful W brand was used in the development of Hilton’s Denizen brand, which it launched in March in a blaze of publicity but has since scrapped.

Both Mr Klein and Mr Lalvani are understood to be among the subjects of the criminal investigation, together with Steve Goldman, Hilton’s head of global development and real estate and another former Starwood executive.

Lawyers for Mr Klein and Mr Lalvani, both of whom have now left the group after initially being placed on paid administrative leave, expressed confidence that the investigation would reveal no grounds for a criminal prosecution. A lawyer for Mr Goldman insisted that he had done nothing wrong.

As The Times revealed last month, Mr Goldman, who was instrumental in recruiting ex-Starwood executives, is on leave and is not expected to return to the company.

His role has been assumed on a temporary basis by Ian Carter, Hilton’s president of global operations, who was joint No 2 with Mr Goldman behind Chris Nassetta, the chief executive.

Analysts said that even if Hilton was eventually cleared of any wrongdoing, the reputational damage of a protracted investigation and legal case could be severe.

One said: “Blackstone’s purchase of Hilton was predicated on a buy-and-build strategy. But if hotel owners and developers think the company is crooked, they may think twice about awarding it management contracts and franchises.”

Hilton insisted last night that its development pipeline and roll-out of brands internationally remained on track, with projected growth of its luxury brands especially strong.

It also said that it had won a management contract to run a Hilton Garden Inn hotel in Samara, Russia. The 195-room hotel, which opens in 2012, is the group’s sixth Russian property.

Blackstone has already written down the value of its equity investment in the company by 50 per cent and analysts believe that its stake could be diluted if banks opt for a debt-for-equity swap. The private equity firm is understood to be looking at options for refinancing Hilton’s $20.6 billion (£13 billion) of debt, although the debt carries no covenants and does not come up for renewal for four years.

Times Recommends

• ‘Lame duck’ fear for FSA as chief quits
• Storm over bailout of EU's most ailing economy
• Northern Rock to drop 100% savings guarantee