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U.S. investment bank Lehman Brothers Inc. appears to have been a victim of a fraud in which swindlers used forged documents from one of Japan’s biggest trading companies to bilk it out of as much as $250 million.

U.S. investment bank Lehman Brothers Inc. appears to have been a victim of a fraud in which swindlers used forged documents from one of Japan’s biggest trading companies to bilk it out of as much as $250 million.

Late last year, a unit of the New York-based investment bank issued loans to a fund run by a medical consulting company owned by LTT Bio-Pharma Co., a Japanese biotechnology company based in Tokyo. The funds, which were to be used to help provide trade financing for hospitals buying medical equipment, were secured with certificates from Marubeni Corp., one of Japan’s biggest trading firms.

Lehman grew concerned at the end of February when its funds were not repaid, according to a person familiar with the situation. The LTT Bio-Pharma subsidiary filed for bankruptcy protection on March 19.

Lehman officials acknowledged that the firm has filed a criminal complaint with Japanese police about the situation. A spokesman says the firm believes Marubeni is responsible for repaying Lehman, which is studying how it might proceed.

In a statement, Lehman said it was “working closely with the authorities to seek full recovery of funds it believes to have been fraudulently misappropriated.”

News of the alleged fraud comes as uncertainty surrounds Lehman Brothers, one of Wall Street’s most venerated names. Speculation that it could be the next financial institution to succumb to the current credit crunch have battered its shares, which have skidded 34% in the last month to $37.87.

It is unclear how much money Lehman extended to the fund, but a person familiar with the situation said it could be around $250 million.

Marubeni, which fired two employees who may have been involved in the alleged swindle, also acknowledged the incident occurred but says it is a victim of identity theft. “This does not involve our company,” a spokesman said. “We have no obligation.”

For a couple of major US law firms, Paris rather than London has become the power base of their European operations as they put expansion plans to the fore. 7

For a couple of major US law firms, Paris rather than London has become the power base of their European operations as they put expansion plans to the fore.

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