A convicted rapist attended a Labour Party fund-raiser held by Gordon Brown, BBC Two's Newsnight has revealed.
Mr Oyston made his fortune in property and media
Tycoon Owen Oyston, jailed in 1996 for raping a 16-year-old girl, is believed to have paid £10,000 for a table at the Wembley Stadium event.
The prime minister has asked party officials to investigate and said no money should be accepted from him.
Mr Oyston said he was "not surprised" to be invited, as he had appeared at Wembley before and nobody had objected.
Mr Oyston, who was once the chairman of Blackpool Football Club, said in a statement: "In May I was invited to walk right out on to the pitch in front of 53,000 people to celebrate Blackpool's win and promotion.
"Not one person objected to me being on the pitch at Wembley."
Among the guests at the event were former Prime Minister Tony Blair, Manchester United manager Sir Alex Ferguson and singer Mick Hucknall.
Labour MP Stephen Pound, who was also at the event, told Newsnight that Mr Oyston's attendance was "downright embarrassing, toe-curlingly awful".
"The man's a convicted rapist. He shouldn't have been there; somebody is going to have to explain why he was invited.
"I can only assume that someone didn't recognise him because (Mr Oyston's conviction) was quite a few years ago."
He said he thought Mr Oyston's connection with Blackpool FC may have been the reason for his invitation.
Mr Oyston made his fortune in property and media before he was jailed for six years at Liverpool Crown Court. He was released after serving three-and-a-half years.
Trial judge Mr Justice McCullough described his offence as "horrendous".
He was convicted of raping the teenage would-be model at his country home, Claughton Hall in Lancashire, in 1992.
A spokesman for Mr Brown said: "Mr Brown did not meet Mr Oyston, nor was he aware of his presence in advance."
He added that the prime minister has asked the party's general secretary to investigate the circumstances, and instructed him that any donation from Mr Oyston should not be accepted.