Victims Grow in Alleged Japan Fraud Case

The parent of a Japanese health care company linked to fraud alleged by Lehman Brothers said Friday about $1 million of its money has vanished, adding to a growing list of companies claiming to be victims.

The fraud allegations came to light last weekend, and on Monday, investment bank Lehman Brothers Holdings Inc. sued Marubeni Corp. for $350 million in damages. Lehman says employees of the Japanese trading company helped arrange dubious funding for Asclepius, the since-failed company at the center of the case.

Now, Tokyo-based Asclepius parent LTT Bio-Pharma, a medical consulting company, says it was duped as well.

A company spokesman said Friday LTT Bio-Pharma has told police that 100 million yen ($976,000) of its money is missing, and that a former president of LTT Bio-Pharma was suspected of taking it without authorization.

The spokesman asked to be identified only by his surname Yamane, citing the case's sensitivity. LTT Bio-Pharma has begun an investigation and damages may be bigger, he said.

'We suspect fictitious transactions,' Yamane said in an interview.

The disclosure is the latest development in an alleged swindle involving an Asclepius executive. Two former Marubeni employees arranged a meeting of the executive with Lehman officials at Marubeni's Tokyo office _ giving the negotiations the appearance of Marubeni backing and winning financing from the bank for a hospital renovation project.

Marubeni has denied wrongdoing. It says the documents related to the project were forged and were not Marubeni's. Its employees, since dismissed, were duped by the Asclepius official, according to Marubeni.

Asclepius claimed to be overseeing more than 100 health care businesses across Japan, but Yamane said much of it may have been a scam. LTT Bio-Pharma has denied involvement in fraud, and says it had no way of checking whether the deals were genuine.

The scheme has claimed other victims.

Medcajapan Co., a Japanese nursing care provider, said 3.5 billion yen ($35 million) has gone missing. FinTechGlobal Inc., a Japanese technology investor, says it may have been duped out of 2.2 billion yen ($22 million).

The lawsuit is the latest challenge for Lehman amid the global credit crunch. The sudden near-collapse of Bear Stearns Cos. has added to the concerns that other investment banks may also face liquidity problems.