PC part people, look away. This’ll hurt.
Four South Korean banks filed a suit Friday. It alleges “massive fraud” with an outstanding debt of over $230 million. Among the defendants are electronic parts seller Newegg, as well as wholesaler ASI Corporation and its officers.
The Industrial Bank of Korea, Keb Hana Bank, Nonghyup Bank, and Kookmin Bank are being represented by Gibson Dunn. And this is, essentially, a follow up to a 2015 suit filed by the four. The previous successful suit was targeted on the central figure of the fraud: Moneual CEO Park Hong-seok. Park was sentenced to prison and forced to pay around $31 million after borrowing, and failing to pay back, millions. The current lawsuit calls that “one of the largest instances of fraud in South Korea’s history.” The Banks allege that these companies aided Moneual in that scheme.
The documents state that Moneual, Newegg, and ASI were involved in “an intricate scheme of circular transactions”. Also submitted are over 70 pages of supposedly fraudulent orders used between the three to aid Moneual in what it was doing. There is also and allegation that both Newegg and ASI received kickbacks for aiding Moneual. Not to mention the fact that the documentation shows that Newegg was buying components from them for over 300% markup. From the suit:
Newegg issued fraudulent purchase orders for the purported purchase of home theater personal computers (“HTPCs”) and other goods manufactured by Moneual. With regard to the HTPCs, Moneual purported to charge ASI and Newegg between $2,530 and $2,980 per HTPC unit, and those amounts were stated on the invoices and purchase orders from ASI and Newegg upon which the Banks advanced funds to Moneual. However, the Banks later learned that in reality, the HTPCs were only worth $8 per unit.
So, long story short, Newegg might just be screwed. The downside? They might no longer function as a business if this suit succeeds. The upside? Well, you might be getting parts at spectacular prices for a very short time.
Sources: Gizmodo, L.A. Times
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