The US Federal Bureau of Investigation (FBI) is probing the takeover offer from PTG Capital Partners for Avon products, valuing the cosmetics company almost three times its market capitalisation.
The Wall Street Journal reported the FBI probe for the first time, saying the enquiry is in initial stages and it would come simultaneously with a civil probe by the Securities and Exchange Commission, which shared information with the FBI.
The probe by FBI means that the apparent fake takeover bid has violated criminal statutes.
Meanwhile, UK officials are also looking at the takeover bid due to the company's incorporation in the British Indian Ocean Territory, a small cluster of islands about 2,600 miles off the eastern coast of Africa, where no companies are registered.
In a filing with the US Securities and Exchange Commission (SEC), a company which identified itself as PTG Capital Partners and is based in London, offered to acquire Avon at $18.75 per share, valuing the company at a whopping $8bn (£5bn, €7bn).
Shares in Avon Products spiked as much as 20% on 14 May following the offer, but prices closed up modestly after Avon denied the receipt of any such offer.
According to the SEC's Edgar company database, PTG is incorporated in British Indian Ocean Territory, an archipelago between Africa and Indonesia. However, there is no evidence for the company's existence. It does not have a working website, and the numbers given in the filing are not related to it.
Filings with the SEC are automated, and the staff generally does not correct errors or intervene in the process. Whoever wants to submit a filing on the website may easily do so by applying for a password in an online form.