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Newegg and ASI being sued for allegedly engaging in massive fraud

Popular computer parts website Newegg is being sued for allegedly engaging in massive fraud scheme. A suit filed in the US District Court in Los Angeles by four South Korean banks gives us some details.

The four Korean banks allege that Newegg engaged in “massive fraud” with an outstanding debt of at least $230 million. California-based electronic parts seller Newegg has been named as a defendant, along with Wholesaler ASI Corporation and its officers.

The four banks, Industrial Bank of Korean, Keb Hana Bank, Nonghyup Bank, and Kookmin Bank, are represented by LA firm Gibson Dunn. This is a followup of the 2015 lawsuit against Moneual CEO Park Hong-seok, where in 2015, he was sentences to 23 years in prison and ordered to forfeit over $31 million after borrowing and failing to repay. The banks are not targeting the companies they believe acted as Moneual’s co-conspirators.

The documents allege that Moneual, Newegg, and ASI engaged in “an intricate scheme of circular transactions.” The banks have submitte d over 70 pages of alleged fraud orders as evidence, stating that Newegg and ASI created the paperwork that Moneual used to secure loans. In addition to this allegation, the banks also state that Newegg and ASI “received kickbacks from Moneual in varying amounts in exchange for agreeing to collude with Moneual to defraud the Banks.”

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.

The suit is now demanding monetary damages from Newegg and ASI. These damages will be determined at a jury trial. We have reached out to both Newegg and ASI for comment and will update this report if we hear back.

Source
LA Times
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Hamza Khalid

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