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Computer Parts Site Newegg Is Being Sued For Allegedly Engaging In Massive Fraud (gizmodo.com)
schwit1 shares a report from Gizmodo: A suit filed Friday in the U.S. District Court in Los Angeles by four South Korean banks alleges "massive fraud" with an outstanding debt of at least $230 million, and California-based electronic parts seller Newegg has been named as a defendant, along with wholesaler ASI Corporation and its officers. These new documents allege that Moneual, Newegg, and ASI were engaging in "an intricate scheme of circular transactions." The banks submitted a list of over 70 pages of supposedly fraudulent orders as evidence that Newegg and ASI created the paperwork that Moneual used to secure loans. The suit further claims that Newegg and ASI "received kickbacks from Moneual in varying amounts in exchange for agreeing to collude with Moneual to defraud the Banks." One method of inflating purchase orders for Moneual -- a brand barely remembered in North America as a a low-tier entrant into the robotic vacuums market -- allegedly involved creating paperwork that showed components being sold for over 370 times their value.
"The Seoul Central District Court convicted Park Hong-seok, head of Moneual Inc., a manufacturer of computers and small home appliances, of getting a total of 3.4 trillion won (US$3 billion) from 10 local banks between October 2007 and September 2014 based on forged documents that falsely showed the company's computer export contracts."
Were they forged, as alleged back in 2015, or were they real and NewEgg was part of the scheme? What was in it for NewEgg? It isn't like they did a lot of business selling Moneual's products.
Seems like the lawyers are looking for deep pockets.
And I like shopping at newegg, this is obviously fake news because anyone I like for one reason couldn't possibly be bad for other unrelated reasons.
I have my "slashdot mentality" hat on tight today!
Where can I get a couple $8 HTPCs?
Anytime I think I'm getting a deal with their Premier discounts/free shipping, I look at Amazon to find that Prime is either matching or beating Newegg.
Straight up. Not knowingly at first, but the continued it.
Bummer. I actually liked NewEgg.
I read at +2. If your post doesn't reach that level I will not see or respond to it.
That's the same markup as bottled water and barista coffee!
so we were for a long time one of their largest customers. They used to be great. Then they, like amazon.com did when they abandoned books and became stupid, decided they wanted to become a platform to support third-party frauds that weren't them. When newegg only sold computer parts, they were the best in the business. Now, they're just like any other site that allows fraudulent third-parties to sell via their platform. I don't want to see ads for, for example, air conditioners and bidet toilet seats.
When you fight back against the evil doers your papers better be in order!
(Ducks and runs away, dodging more eggs)
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
HAHAHA... Finally someone got the bastards!
The "Donald" is a fat, retarded, piss-drinking faggot.
Although it might be unrelated, I can't help but wonder if some patent troll is behind this. Newegg has been giving them a hard time and I wouldn't put some form of obscure payback past them.
Ahh Newegg. I haven't bought from them since 2004 when I was assembling an Athlon 2500+ rig with 256 MB RAM and a 40 GB HD (whoa!). You can blame pricewatch.com, Google Shopping and Amazon for that shift away from Newegg. Anywho, it would be truly sad if they indeed are guilty for what is being alleged. That's the thing though, they are only being alleged to have committed this fraud so far from what are presumably money hungry law firms and the (perhaps rightfully so) banks who employ them. I say let Newegg have their say first before they are tar-and-feathered.
I hope this is wrong and that Newegg was only caught up in some sort of money laundering scheme and not complicit in it, but I suppose time will tell. I still think of Newegg as a bastion of what internet commerce could be before the megalith that Amazon is took over.
Buying things for several times parts and labor.
Moneual sells lots of these home entertainment (Vista PCs in hifi boxes with speakers etc) to New Egg at $2500+, then buys a lot of them back from NewEgg. Leaving only a net sale per unit of $8, since a lot of the buys cancels out a lot of the sale value.
Moneual shows only export invoices to banks to secure funding, does not show the purchase side which is hidden in other companies are via other channels.
I doubt Newegg did anything wrong or illegal here, it's just that Moneual have no money, so they've been added to the lawsuit to try to generate some cash to make the lawsuit worthwhile.
Collusion can escape auditors if samples miss the fraud transactions but the bank making a loan based on sales invoices and not a full audit of substance of a business seems like the shareholders should sue the incompetent bank.
Leave Newegg alone!!!!
I've been the victim of their fraud.. But much like a modern pyramid scam, it's just barely legal enough for them to get away with it.
The article doesn't mention the method they used/use swindled me...
It goes like this - Put items into cart, check out...
Give payment information, then they display an error "Sorry, we couldn't process payment!! Please try again!"
So, try again.. "Thank you!! Payment accepted."
Then they send two copies of the order (Having double-charged, of course).
"Hey, you ordered twice!! Not our fault! If you want to return the extra items it will be a 15% or $20 restocking fee per item, whichever is greater"
Overall, makes me very cautious about dealing with them.
This is what happens when you sell your American business to a Chinese company. Lying, bank fraud, copyright infringement, selling known defective products, lying to consumers, not complying with fair business laws, lying in their advertising, etc is what Chinese companies do. The culture over there resembles Turkish street vendors.
I used to *love* Newegg and bought all of my parts there, but stopped a couple years ago when I got burned by a bad video card and they made returning it absolute hell. At some point along the way their focus seem to turn more towards being indiscriminate shite merchants. Home decor. Toys. Automotive. âoeApparel and accessoriesâ. Vitamins, FFS.
Amazon usually has the stuff as cheap or cheaper, and their return policies and customer service are superb.
You all seem to have forgotten when NewEgg was originally selling things "auction" style where you'd bid on their products. The thing was they would creatively mis-label products, such as labelling disposable film cameras as "Digital Camera". Then after that I seem to remember something about selling rejected OEM equipment but I don't remember if they actually got in trouble for that one...
If you click through on any of these profile names, you'll see hundreds of reviews written on cheap, Asian-sourced gadgets. Never any expensive, name-brand products. And the reviewers are so prolific, they write the reviews almost every day and usually upwards of five reviews per day. It's common to see one of these fake reviewers purchase two or three knock-off fitness trackers over the course of two months, yet none of their reviews compare the multiple trackers they seemingly have recently purchased.
I can imagine that when they boost a product up to "#1 seller" status, they can get loans against projected sales volume just like these scammers did via their Newegg fraud.
$5 / month hosted VPS on linux = awesome!
Newegg was founded by Fred Chang, who is chinese. It is now owned by a chinese corporation. Looks like neweg got tricked and dragged into this mess. Corruption in South Korean is rampant, just look at what happened to the former president. https://en.wikipedia.org/wiki/...
And reminded us that at one time, newegg wasn't the slowest and most annoying website on the internet.
I am not normally so harsh on a business, but I'm glad to see they are getting some comeuppance.
Anyone who still likes Newegg because they haven't gotten screwed yet should really take heed. This is a "where there's smoke; there's fire" type thing. Newegg are really the worst kind of company because they give zero shits about their customers. This is a lot different than companies like the big banks or the airlines where they just have lackluster or inadequate customer service. Even those behemoths are smart enough to know that they need satisfied customers to have success, even if they can't seem to satisfy them. Newegg by contrast actively shits on customers at every opportunity. I am convinced they would prefer a business model where customers did not exist and product went out the door so long as it was priced cheaper than anyone else and designed to fail immediately after they ceased to be responsible for it.
At one time I spent 6 figs/year through them on hardware. They lost my business with a single bad customer service incident. They shipped me the wrong server CPU, and I opened it before I noticed. I did not even ask them to return it; I just asked them to refund the difference between the expensive CPU that I ordered and the cheap one they sent -- about $600. Although they were clearly at fault, it was not economically worthwhile for me to pursue any action beyond making a claim with AmEx (to whom Newegg made false statements) and making an angry phone call to some VP over there.
Did they think they were Apple ?
But I remember buying some RAM from them back in 2001. They sent me double what I ordered, and charged me for it. It was clearly a mistake on their part as the invoice only showed what I ordered. I finally got them to agree to take the return, and vowed to never shop with them again.
Fast forward a few years and they really started to improve, and I did buy quite a few things from them. They were the gold standard at the time for prices, reviews, communication, and shipping speed. Even if I could get it a little cheaper elsewhere, I always knew I could count on NewEgg to come through consistently.
But they just became too big, too 'ambitious'. I still might use their product finder because their advanced search is great. But I don't have a problem buying from somewhere else. It's even hard to make sense of their reviews anymore. Between them and Amazon, trying to find a decent review on a product is tough. I don't even know what I think about this story. It wouldn't surprise me if they did engage in fraud, it wouldn't surprise me if someone was just going after them. The sad part is I don't hold any loyalty to them after how they've gone downhill.
My beliefs do not require that you agree with them.
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