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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.
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.
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.
Amazon and Newegg both went to shit when they opened themselves up to being filled with chinese knockoffs in the "marketplace". It basically turned them into a more expensive ebay where you need to try and hunt for the one legitimate seller page and thenhope Amazon's mixed inventory doesn't send you the knockoff anyway (like happened with the eclipse glasses).
Hell even on Ebay you used to at least be able to just block any listing not in North America, although now even that doesn't work.
A bullet may have your name on it but splash damage is addressed "To whom it may concern."