Sir Philip Green is being investigated by US police after a fitness instructor alleged the retail tycoon groped her at a luxury resort, officers have said.
Police in Arizona said detectives are working on a case after a woman came forward with a complaint about the Topshop billionaire on Monday.
The Daily Telegraph reported that his former Pilates teacher, Katie Surridge, said Sir Philip "spanked" her, inappropriately touched her and made sexual comments at Canyon Ranch.
A spokesman for Sir Philip denied the allegation to the newspaper and said it was dismissed by the resort in Tuscon, Arizona, after an investigation.
Pima County Sheriff's Department spokesman Deputy Daniel Jelineo confirmed an investigation had been launched after a complaint by Ms Surridge, but could not give further information because it is in an early stage.
"Sir Philip Green, I'm aware of a report that was made to our department yesterday, on the 18th," the deputy said.
"He's being investigated for a criminal offence at this time."
The Telegraph reported that the mother-of-two alleged he repeatedly "spanked" her in January 2016 after he entered her studio following a class.
"I felt very taken advantage of and like, you know, just a piece of meat there at his disposal," the 37-year-old said, according to the newspaper, which said she waived her anonymity.
"It feels completely sexual in nature. And the way – the noises, and the 'oh, you naughty girl'. Like – ugh – I can hear him saying it right now."
A spokesman for Sir Philip Green said: "All this was investigated by Canyon Ranch at the time. Nothing was found against Sir Philip and the matter was dropped.
"In terms of the allegation, it did not happen. Sir Philip has visited the ranch since that time and has no issues with the management or any of the people there."
Reporters previously tracked down the Arcadia owner at Canyon Ranch to quiz him over allegations of sexual harassment and racial abuse.
The Telegraph has reported that five of his employees signed Non-Disclosure Agreements (NDAs) to keep their complaints quiet, with one being paid more than £1 million.
Sir Philip, 66, denied his behaviour was criminal or amounted to gross misconduct.