Korean banks sue Southern California computer parts retailer Newegg, alleging ‘Ponzi scheme’ | Amazing Articles
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Korean banks sue Southern California computer parts retailer Newegg, alleging ‘Ponzi scheme’

- korean banks sue southern california computer parts retailer newegg alleging ponzi scheme 1000x600 - Korean banks sue Southern California computer parts retailer Newegg, alleging ‘Ponzi scheme’

https://www.latimes.com/business/technology/la-fi-tn-newegg-lawsuit-20171020-story.html

Link posts aren’t allowed, but I felt this was important enough to justify its own post.

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15 Comments


  1. DZCreeper

    October 21, 2017 at 3:57 pm

    > The lawsuit, filed in U.S. District Court in Los Angeles, alleges that Newegg, along with computer wholesaler ASI Corp., made fraudulent orders for home-theater personal computers from Moneual, a Korean hardware manufacturer. Moneual, accused of masterminding the scheme, used these phony orders to secure financing from banks.
    >
    > Moneual, according to the lawsuit, obtained additional financing from the banks backed by more fraudulent purchase orders from Newegg and ASI. The lawsuit alleges that Newegg and ASI received kickbacks for their participation.
    >
    > In the end, Moneual secured more than $3 billion in loans from 10 major Korean banks through the intricate scheme of circular transactions. It defaulted on many of the loans and eventually owed around half a billion dollars. Moneual’s chief executive, Hong-seok Park, was sentenced in 2015 to 23 years in prison for financial fraud (a high court later reduced his sentence to 15 years), and was subject to fines and forfeitures.
    >
    >

    The company that actually committed the financial fraud has already been penalized from the sounds of things, now the Korean banks are going after Newegg and ASI for being conspirators.
    >
    > The banks allege that they lent Moneual hundreds of millions of dollars because the manufacturer had shown that Newegg and ASI had made sizable orders. Both Newegg and ASI were in on the scheme, the banks say, because Moneual priced the computers that were supposedly ordered at 300 times their actual market value.

    Reply

  2. 2tb-of-yiff

    October 21, 2017 at 3:57 pm

    We’ll have to see how this turns out. I’d hate to lose Newegg.

    Reply

  3. 2smokesboys

    October 21, 2017 at 3:57 pm

    So…. where does this put my credit card debt if with them, if they say, close down?

    Reply

  4. boostedmooseman

    October 21, 2017 at 3:57 pm

    When I started building computers in middle school all I used was Newegg, 24 now, and over the years I’ve slowly stopped buying anything from there unless I absolutely need to. Like there if there is no other options. First thing that turned me off was their stupid rush processing fee, which at least they got rid of last I saw, but then slowing turning into a shittier Amazon as time went by with their marketplace items. It wouldn’t be a problem if their customer service was as good as Amazons, and they dealt with issues with these marketplace items better, but I feel their customer service went from great also to kinda shit so it made matters worse. I didn’t have very good experiences with it personally. I also know a lot of people in this sub are in college/uni, so combined with that I get student discount on Amazon Prime. So automatically get free 1-2day shipping on most items, sometimes end up getting things from Amazon on same day, and how expensive shipping is on Newegg comparatively… Really have no use for Newegg anymore TBH. I’ve kinda wondered how they weren’t struggling these days, but apparently they are if this case ends up being true. It’s a shame, because they were king of the hill for a while, and could have really leveraged it, but they let it spoil.

    Reply

  5. crimusmax

    October 21, 2017 at 3:57 pm

    This kind of thing happens all the time in business. They just happened to get caught. Also- isn’t there something super corrupt about South Korean government? Somebody probably missed a payment to an official, and now here we are.

    Reply

  6. briangallia

    October 21, 2017 at 3:57 pm

    Didn’t Newegg sell a bunch of fake CPUs a few years back?

    Reply

  7. stixx_nixon

    October 21, 2017 at 3:57 pm

    Sounds like Korean banks trying to save face after extending retarded amounts of debt.

    This is exactly how the us sub prime shitstorm happened.

    Greedy banks deserve nothing but punishment.

    Reply

  8. Ragiv13

    October 21, 2017 at 3:57 pm

    Remember when Newegg was a spunky little company that had decently priced parts and fast west coast shipping? I memeber.

    Reply

  9. blacksantron

    October 21, 2017 at 3:57 pm

    Whether I buy through Newegg or not their layout, the information provided for each part is amazing.. PCPartPicker + Newegg + B&H + manufacturers websites will give you a great idea of how to build and how much it’ll cost…

    Built a beast a few months ago and with the help of /r/buildapc and my own grunt work with those sites, taking time to learn, I’m totally pleased.

    Stinks that it was probably just a couple shady douches in the company that brought this on….

    Reply

  10. BespokePoke

    October 21, 2017 at 3:57 pm

    This is such a dirt common scam but the 3b number makes it really really uncommon. Man that is a TON, never have I heard about this scam getting anywhere close to that.

    Reply

  11. 2smokesboys

    October 21, 2017 at 3:57 pm

    Oh, duh. Well Shit, I don’t wanna lose it.

    Reply

  12. xXConfuocoXx

    October 21, 2017 at 3:57 pm

  13. PHPH

    October 21, 2017 at 3:57 pm

    Newegg has always been shady af. I guess it’s catching up to them lol.

    Reply

  14. JayWaWa

    October 21, 2017 at 3:57 pm

    Not really surprised. Newegg is shady AF. has been for a long time.

    Reply

  15. gladbmo

    October 21, 2017 at 3:57 pm

    I’ve never ordered from newegg, glad i didn’t.

    Reply

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