The Serious Fraud Office (SFO) has begun an investigation into Dominic Chappell and his associate Paul Sutton.
Chappell is the former boss of BHS who bought the former department store chain for £1 from Sir Phillip Green and subsequently oversaw its collapse.
It is understood that the SFO's investigation will focus on the dealing between Sutton, a convicted fraudster, and Chappell in the run-up to the purchase of BHS in March 2015.
Sutton is thought to have initiated talks with Green over the sale of BHS, but was shunned when an anonymous source tipped Green off about his previous conviction.
Following this, Chappell stepped in to take the deal for himself, ending with the triple-bankrupt man purchasing the business for £1.
Chappell worked alongside Sutton in his suspected Ponzi scheme B52 Investments which sold share certificates.
He is said to have owed the fraudster a significant sum of money following a failed property development scheme on the Isle of Wight and was working “as his driver” to pay off his debts at the time of the deal.
A source told the Sunday Times that the SFO was attempting to establish whether there were grounds for a criminal investigation into BHS.
It was also announced earlier this month that two board members from Chappell’s Retail Acquisitions firm were under investigation by the Insolvency Service as part of its investigation into BHS demise.
Mark Tasker and Stephen Bourne were paid £387,500 for their role in the acquisition and resigned the day the purchase of BHS was completed.