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South Korean banks accuse Newegg of running ponzi scheme

Posted on Monday, October 23 2017 @ 11:28:23 CEST by


Newegg logo
Newegg is sued by four South Korean banks, who allege that the e-tailer collaborated with South Korean home appliance maker Moneual to defraud investors of hundreds of millions of dollars. The banks claim Newegg and computer wholesaler ASI Corp. were involved in a scheme to drive up the valuation of Moneual by placing a large volume of fake orders at highly exaggerated prices:
Now the banks have filed suit against Moneual’s alleged partners. The lawsuit argues that the banks loaned Moneual hundreds of millions of dollars, based on the large volume of orders made by Newegg and ASI. The computers that Moneual ordered were allegedly priced at 300 times their actual retail value, which is why the banks believe Newegg and ASI were part of the scam.

“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 lawsuit alleges.
Moneual was able to squeeze over $3 billion in funding from 10 South Korean banks but defaulted on many of those loans. The company CEO, Hong-seok Park, is currently serving a 15-year prison sentence. Full details DigitalTrends.



 



 

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