As recently as 2010, Jack Lew, President Obama‘s nominee to be the next secretary of the Treasury, had as much as $100,000 invested in a CitiGroup venture capital fund based in the Cayman Islands’ notorious Ugland House, a building whose mailboxes are home to nearly 19,000 corporate entities, many of them tax shelters.

The investment has been in public documents for years and drew no attention when Mr. Lew was confirmed to be deputy secretary of state in 2009 and director of the White House Office of Management and Budget in 2010.

But the fund is coming to light as Mr. Obama and Congressional Democrats are zeroing on taxes lost to off-shore entities, including hedge funds, as a way to stave off $1 trillion in across-the-board spending cuts set to begin March 1.

Aides in both parties said it was quite likely to come up during his confirmation hearing Wednesday. Senate Democrats are struggling to come up with a package of spending cuts and tax loophole closings that could stave off the automatic spending cuts — known as sequestration — for at least three months. Tax breaks for hedge fund managers and offshore tax shelters are a prime target.