Donald Trump arranged for a group of prostitutes to urinate on the Moscow hotel bed where the Obamas had slept, according to sensational reports in the US.
The President-elect engaged in 'perverted conduct' because he 'hates' Barack and Michelle Obama, it is claimed.
The lurid detail is contained in a dossier allegedly written by a retired British MI6 spy for Trump's political opponents.
None of the claims have been independently verified.
In response to the reports, Donald Trump tweeted: "FAKE NEWS - A TOTAL POLITICAL WITCH HUNT!"
The memo, published in full by Buzzfeed, claims: "According to Source D, where s/he had been present, Trump’s (perverted) conduct in Moscow included hiring the Presidential suite of the Ritz Carlton Hotel, where he knew President and Mrs Obama (whom he hated) had stayed on one of their official trips to Russia, and defiling the bed where they had slept by employing a number of prostitutes to perform a [redacted] show in front of him.
The FSB - Russia's spy agency - had the hotel room bugged at the time with "microphones and concealed cameras", it is claimed.
The report goes on: "Speaking separately in June 2016, Source B (the former top level Russian intelligence officer) asserted that Trump’s unorthodox behaviour in Russia over the years had provided the authorities there with enough embarrassing material on the now Republican presidential candidate to be able to blackmail him if they so wished."
Another allegation says that Trump had participated in sex parties in St Petersburg, but that witnesses were “bribed or coerced to disappear”.
It is also claimed that Russia tried to further compromise Donald Trump through "lucrative" business deals, including ones involving the 2018 World Cup.
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The report claims: "The Kremlin's cultivation operation on Trump also had a compromised offering him various lucrative real estate development business deals in Russia, especially in relation to the ongoing 2018 World Cup soccer tournament.
"However so far, for reasons unknown, Trump had not taken up any of these."
Possession of compromising information about Trump has led to Russian intelligence agencies "cultivating, supporting and assisting" the Republican for five years, the report claims.
The billionaire businessman is understood to have found out about the claims during a during a meeting with intelligence chiefs, who last week presented him with evidence of Russian interference in the 2016 election.
A two-page synopsis of the dossier has been submitted to Trump and President Obama, it is believed.
The FBI is now said to be probing the credibility and accuracy of the allegations.
One high level administration official told CNN: “I have a sense the outgoing administration and intelligence community is setting down the pieces so this must be investigated seriously and run down.
"I think [the] concern was to be sure that whatever information was out there is put into the system so it is evaluated as it should be and acted upon as necessary.”
The classified briefings were presented by four of the senior-most US intelligence chiefs -- Director of National Intelligence James Clapper, FBI Director James Comey, CIA Director John Brennan, and NSA Director Admiral Mike Rogers.
Sources claim intelligence chiefs took the extraordinary step of including the synopsis in the briefing documents to make Trump aware allegations involving him are circulating in Washington.
It is understood they also wanted to demonstrate how Russia had potentially harmful information on both political parties, but only released information damaging to Hillary Clinton and Democrats.
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CNN has reviewed a 35-page compilation of the memos, from which the two-page synopsis was drawn, but said it is not reporting their details as it has not independently corroborated the specific allegations.
It is claimed some of the memos were circulating last summer but US intelligence agencies have now checked out the former British intelligence operative and find him and his sources to be credible enough to present the information.
They were prepared by the former MI6 agent, who was posted in Russia in the 1990s and now runs a private intelligence gathering firm.
CNN claim his investigations on Trump were initially funded by groups and donors supporting Republican opponents during the GOP primaries and further investigation was funded by groups and donors supporting Hillary Clinton when he became a nominee.
Spokespeople for the FBI and the Director of National Intelligence have declined to comment.