Sunday, March 30, 2008

The Art of the Con

Oops! Heads up. Lehman has a massive fiasco on it's hands. And they're saying it's of Enron-like proportions.

Lehman Brothers was fleeced out of more than $355 million in a fraud the U.S. investment bank believes was perpetrated by two employees at Japanese trading house Marubeni Corp. according to a person briefed on the matter.

The fraud may have hit other financial institutions as well, according to the source, who spoke on condition of anonymity.

How it went down:

The person briefed in the matter told Reuters that two former Marubeni employees -- Shingo Yamaura and Takuro Nitahara -- convinced Lehman to help finance what it understood were Marubeni's equipment leases and supply contracts with hospitals. Lehman gave the partnership money in advance to fund initial leases and contracts.

When Lehman sought payment under its deal on Feb 29, 2008, Marubeni said the seals on the contracts had been forged, and refused payment, according to the person briefed on the matter.

Marubeni declined comment on Lehman's statements, and said it could not give information on people no longer with the trading house or comment on ongoing investigations.

Marubeni also claims that the two former employees were independent contractors. In any event, it's going to be a big mess before all is said and done. Hope it's not another nail in Lehman's coffin.

The Art of the Deal.