In the second week of November 2005, two very strange incidents happened to Prim Watsa, the self-made chief executive of Fairfax, one of the world's largest insurance companies.

A parcel arrived at his church, St Paul's Anglican, in Toronto, for his pastor, Rev Park. Inside was a 30-page document falsely claiming Watsa was a fraudster who had stolen millions from the Catholic Church and was involved in sado-masochistic orgies.

The sender, a "P. Fate" with a return address at St Patrick's Cathedral in New York, had been reading Reverend Park's weekly News from the Pews and knew that Watsa was on the church's investment committee. It suggested that the church review its involvement with Watsa.

The second incident occurred at Fairfax headquarters. A courier dropped off a parcel for Watsa and began ostentatiously taking photographs of the reception area. Watsa found that the parcel contained two copies of the 2004 financial statements of Fairfax's Dublin subsidiary, nSpire, and audited statements from Fairfax's Luxembourg subsidiary.

The message was clear - the sender was watching Fairfax's European operations closely and wanted Watsa to know it.

For Watsa, it was the final straw in what he alleges is a campaign of harassment and vilification orchestrated by some of the biggest names on the Wall Street hedge fund scene.

According to a $6 billion lawsuit lodged in New Jersey, the harassment was exhaustive - senior Fairfax executives stalked on their way home, hundreds of anonymous letters sent to investors, false information leaked to journalists and blogs churning out negative spin about Fairfax. One hedge fund manager is accused of orchestrating a false analyst report, which said that $500 million was moved from Dublin to falsely boost Fairfax's US dividends.

One of the most serious incidents, according to Fairfax, involved an "eerie" anonymous e-mail sent to Catherine Regan, the Irish legal counsel to Fairfax's European run-off company, after she was interviewed for the legal website, lawyer.com. The article, by Helen Morris, included a photograph of Ms Regan leaning against the nose of a giant statue.

"I am reading about you in the Lawyer News and am stunned by the fact that you are posing next to the largest nose I have ever seen," ran the email. "Being so close to such a nose, one would think the sense of smell would rub off on you. In particular, can you smell the very serious negative issues that are facing run-off for Fairfax? Issues which you seem to have glossed over when meeting with Miss Helen Morris for your article."

Fairfax said the e-mail ended with the "ominous" line: "I will be seeing you soon".

The harassment, Fairfax alleges, ranged from the grave to the adolescent - leaving excerpts from Harry Potter movies and president Bush's speeches on the answering machines of Watsa and his finance officer.

According to Fairfax, "The Enterprise", as it referred to the hedge fund managers in its lawsuit, had successfully brought down Fairfax's share price to make hundreds of millions of dollars buying cheap stock.

The Enterprise, it claims, involved some of the biggest names on the hedge fund scene - SAC founder Steven Cohen; Rocker Partners founder David Rocker; hedge fund Exis Capital Management and its chief executive officer, Andrew Heller. All the defendants deny wrongdoing.

Fairfax claims Exis hired a former analyst, Spyro Contogouris, to engage in an unrelenting campaign of "dirty tricks", along with another hedge fund manager, Max Bernstein. Fairfax has supplied the New Jersey courtroom with reams of documents and e-mails allegedly sent by the pair to Fairfax employees and investors.

Contogouris had a particular interest in nSpire's Dublin office, which employs about 20 people. He travelled to Dublin to pick up as much information as he could, depositing much of it with Fortune magazine for a 5,000-word article.

The article, while staying neutral in the dispute, states the documents include a tantalising glimpse of Fairfax's movement of capital from Hungary to Dublin, where it was used to fund Fairfax acquisitions in North America. This, says Fairfax, is just another example of Coutogouris's near obsession with the company's European finances, implanting innuendo into perfectly legitimate company transactions.

To Fairfax's delight, Contogouris was indicted in New York last week on four counts of wire fraud in an unrelated case. Fairfax says that its lawsuit is not designed as a distraction while its share price was slipping, but cuts to the very.

"After all this negative talk, the truth is finally coming out," said a spokesman.