A conglomerate of South Korean banks are suing computer parts retailer Newegg (owned by Beijing-based Hangzhou Liaison Interactive Information Technology). The claim is that Newegg aided, abetted, and profited from enabling a Ponzi Scheme to take place with its products orders. The lawsuit has been filed in the U.S. District Court in Los Angeles and alleges Newegg and ASI Corp ASI Corp., a South Korean computer wholesaler, made fraudulent orders from Korean hardware manufacturer Moneual. If you remember back in 2015 Moneual was involved in a fraud conspiracy, whose chief executive Hong-seok Park, was sentenced to 23 years in prison for financial fraud.
It appears that Newegg and ASI took part in the scheme by creating non-existent, exaggerated-pricing (sometimes 300x higher than market value) orders for Moneual products, thus allowing Moneual to gain a higher valuation from investors. By inflating figures Moneual was able to receive hundreds of millions of dollars from South Korean banks. By doing this for Moneual, Newegg and ASI received kickbacks.
When it was all said and done it is suspected that Moneual was able to get their hands on around $3 billion in loads from ten major Korean banks through this scheme. The complaint has said “No such business would have bought the products at such an inflated price, unless it intended to create the illusion of extensive, profitable, high-value commerce between it and its supplier for the purpose of defrauding lenders into supporting the transactions.”
The banks are demanding a jury trial and monetary damages. They say that $230 million is still owed from the faulty loans that Moneual obtained.