Korean banks sue Newegg for taking part in massive fraud scheme

Thursday 26 October 2017 11:13 CET | News

Newegg, a US-based computer parts retailer, has been sued by four major banks from South Korea for taking part in a massive financial scheme.

The four banks — Industrial Bank of Korea, Nonghyup Bank, Keb Hana Bank, and Kookmin Bank — also named ASI Corporation, a US-based computer wholesaler, in the lawsuit. According to documents filed in a federal court in Los Angeles, Newegg and ASI engaged in a Ponzi-like scheme with Moneual, a South Korean electronics company. The technology companies bought products at inflated prices from Moneual, who used these transactions as a sign of a booming business to obtain loans from local banks.

The banks claim that both Newegg and ASI conspired with Moneual when they accepted to buy products at inflated prices ranging from USD 2,530 to USD 2,980 for a home theatre personal computer (HTPC) that was actually worth only USD 8 per unit, according to BleepingComputer.

Moreover, Moneual used these purchase orders to get loans of up to USD 3 billion from ten local banks between October 2007 and September 2014. The company defaulted on the loans in late 2014 and still owes USD 1 billion.

The four banks claim they still have to recover USD 230 million from the hundreds of millions they loaned Moneual. The banks are looking to recover some of those funds from Newegg, ASI, and the other defendants. However, Newegg publicly denied any wrongdoing, the online publication continues.

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Keywords: Industrial Bank of Korea, Nonghyup Bank, Keb Hana Bank, Kookmin Bank, ASI Corporation, fraud, South Korea
Categories: Securing Transactions | Digital Identity, Security & Online Fraud
Countries: World
This article is part of category

Securing Transactions