Newegg Sued for Alleged Involvement in Ponzi Scheme Through Fake Orders
Newegg (owned by Beijing-based Hangzhou Liaison Interactive Information Technology) has been sued by a conglomerate of South Korean banks. The plaintiffs claim that the Southern California computer parts retailer has aided, abetted, and profited from enabling a Ponzi Scheme to take place with its products orders. The lawsuit, filed in U.S. District Court in Los Angeles, alleges that Newegg and ASI Corp., a South Korean computer wholesaler, made fraudulent orders from Korean hardware manufacturer Moneual, whose chief executive, Hong-seok Park, was sentenced in 2015 to 23 years in prison for financial fraud, and additionally subject to fines and forfeitures.
Newegg and ASI took part on the whole scheme by creating non-existent, exaggerated-pricing (sometimes 300x higher than market value) orders for Moneual products, thus allowing it to gain a higher valuation from investors. By inflating sales figures, the suit alleges that Moneual was able to receive hundreds of millions of dollars from South Korean banks. As a reward, Newegg and ASI received kickbacks from Moneual.
Newegg and ASI took part on the whole scheme by creating non-existent, exaggerated-pricing (sometimes 300x higher than market value) orders for Moneual products, thus allowing it to gain a higher valuation from investors. By inflating sales figures, the suit alleges that Moneual was able to receive hundreds of millions of dollars from South Korean banks. As a reward, Newegg and ASI received kickbacks from Moneual.
