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from the pay-no-attention-to-the-companies-behind-the-curtain dept.
Gizmodo and Digitaltrends are among those reporting that electronics retail website Newegg has been sued by South Korean Banks, who say that Newegg and the South Korean Hardware company Moneual conspired to defraud the banks of "hundreds of millions of dollars."
The lawsuit, which was filed in U.S. District Court in Los Angeles, claims that Newegg and computer wholesaler ASI Corp. made false orders for home-theater computers from Moneual. The banks claim that Moneual organized the scheme and used the fake orders to obtain funds from the four banks. Newegg and ASI allegedly received a cut of the money in exchange for their cooperation.
[...] 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 [paid] such an inflated price, unless it intended to create the illusion of extensive, profitable, high-value commerce... for the purpose of defrauding lenders into supporting the transactions," the lawsuit alleges.
The four banks are demanding a jury trial and monetary damages. They say that $230 million is still owed from the faulty loans that Moneual obtained.
(Score: 4, Interesting) by khallow on Tuesday October 24 2017, @04:01AM (1 child)
From this Tom's Hardware article [tomshardware.com], I place the exposing of the Moneual fraud and the subsequent bankruptcy around late 2014.
So an obvious question here is why is it taking three years for these banks to sue Newegg? Surely, the fraudulent transactions in question were discovered earlier.
Anyway, moving on, it's looking a lot like the banks got greedy and didn't look too hard at this business. That kind of sustained growth over a whole decade should have been a warning sign.
(Score: 4, Informative) by bradley13 on Tuesday October 24 2017, @01:04PM
Too lazy to look it up, but I recall reading somewhere that the transactions in question were forged. In which case, they likely never existed, or at least not in the form presented. However, the banks failed to recover all of their money, so they are now looking for other deep pockets to raid. After all, a bank can't admit that it gave stupid loans - it's got to be somebody else's fault.
Everyone is somebody else's weirdo.