It takes a steady hand to part a major investment bank from $350 million of funds. Or sometimes, just a couple of not-so-reputable contract staffers from a reputable, 150-year-old Tokyo trading house, a handful of dummy business cards, an imposter posing as a high-level executive and a meeting or two at company headquarters in an elaborate Ponzi scheme that, but for the grace of God, pretty much anyone could have fallen for.

Lehman Brothers Holdings Inc. has gone to court in Tokyo in an effort to recover $350 million it says it was bilked out of through an elaborate scheme in which employees of a big Japanese trading company allegedly used forged documents and an imposter to raise cash.

The purported swindle, which involved the establishment of a partnership to fund the refurbishment of hospitals, allegedly involved two employees of Marubeni Corp., a 150-year-old trading house, according to people familiar with the situation.

The apparent fraud, which could be one of the biggest and boldest in recent corporate history, involved a funding partnership the New York investment bank entered into with a medical consultancy owned by Tokyo pharmaceutical company LTT Bio-Pharma Co. late last year.

Lehman thought the funds it committed to providing to the partnership were backed by Marubeni, based on documents on Marubeni letterhead that bore a Marubeni board member's seal, which the investment bank later found was forged. At least two meetings to finalize Lehman's participation in the partnership were held at Marubeni's headquarters, according to the people familiar with the situation.

Lehman has filed a criminal complaint with Japanese police and says it believes Marubeni is responsible for repaying the loans. 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." Lehman said the incident won't have a financial impact on the company.

In a statement Saturday, Marubeni said an internal investigation showed that the company had no involvement in the forgery of documents used to secure the loans. "Accordingly, we have no obligation to pay any of these demands," Marubeni said. It said it has filed a criminal report.

Lehman Brothers, which has met with Marubeni about the situation, said it filed a lawsuit in a Tokyo court on Monday seeking repayment from Marubeni. A draft of the complaint was viewed by The Wall Street Journal.

The loss from the alleged scheme comes as Lehman is contending with other issues that have battered its shares. Though the bank says it is well-capitalized and denies rumors that it is facing funding problems, speculation that it could be the next financial firm headed for rocky times in the continuing credit crunch has sent its shares down 34% in the past month.

The situation also could damage Marubeni's reputation as a counterparty in financing transactions, a critical element of the trading company's business. Marubeni says it first became aware of the situation March 6 and launched the investigation. It says it "punitively dismissed" the two employees, who it said were contract staff.

The funding arrangement appears to have been what is commonly known as a Ponzi scheme, in which early investors are paid from funds provided by subsequent investors, according to a person familiar with the deal.

As far back as three years ago, other investment banks entered into smaller agreements with the LTT Bio-Pharma subsidiary, but received their principal and interest, according to a person at an investment bank that made a loan to the group earlier. The same bank declined to make an additional loan to the group this year.

According to Lehman's lawsuit, it first learned about the funding operation in August 2007, when a senior vice president of the firm visited an acquaintance at Asclepius Ltd., a medical consultancy then in the process of being bought by LTT Bio-Pharma, according to the draft complaint. At the time, LTT Bio-Pharma's president was a former official of Marubeni's life-care department, which sells medical equipment to hospitals and other medical institutions.

LTT Bio-Pharma, which completed the acquisition of Asclepius, couldn't be reached for comment.

After several more meetings, Lehman made an internal decision Oct. 24 to participate in the partnership, which would be used to help hospitals modernize their equipment and facilities. As part of the deal, Lehman would disburse the funds on a project-by-project basis, a person familiar with the deal said.

To seal its participation in the project, Lehman asked to meet with the two Marubeni employees and Koichi Sato, the current head of Marubeni's life-care department to discuss terms, the person said.

The meeting took place Oct. 29, at Marubeni's headquarters, next to the sprawling grounds of Japan's Imperial Palace. When the two Marubeni employees said Mr. Sato couldn't attend, the Lehman representatives agreed to an initial disbursement but asked for another meeting.

At another meeting at Marubeni headquarters, Nov. 8, a man identifying himself as Mr. Sato met the Lehman team and presented Marubeni business cards, according to Lehman's lawsuit.

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