Newegg Sued by Korean Banks for Perpetrating Ponzi Scheme

FrgMstr

FrgMstr

Just Plain Mean
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The LA Times has an interesting read that alleges that Newegg was part of a Ponzi Scheme along with ASI Group. The interesting part here is that folks have already been convicted and gone to jail over this, and now the banks that got defrauded are going after Newegg and ASI for being part of this in that they showed orders placed with them that were up to 300% inflated and for these actions received kickbacks. Thanks Zarathustra[H].


In the end, Moneual secured more than $3 billion in loans from 10 major Korean banks through the intricate scheme of circular transactions. It defaulted on many of the loans and eventually owed around half a billion dollars. Moneual's chief executive, Hong-seok Park, was sentenced in 2015 to 23 years in prison for financial fraud (a high court later reduced his sentence to 15 years), and was subject to fines and forfeitures.

Two years on, the banks are now going after Newegg and ASI.

The banks allege that they lent Moneual hundreds of millions of dollars because the manufacturer had shown that Newegg and ASI had made sizable orders. Both Newegg and ASI were in on the scheme, the banks say, because Moneual priced the computers that were supposedly ordered at 300 times their actual market value.
 
Moneual listed the prices wrong. They were the defrauder. I don’t see how Newegg would be on the hook for that. I suspect we would need a lot more information. Isn’t Newegg Chinese now?
 
Newegg has computer parts, yes, but is mostly trying to peddle refurbished junk and cheap chinese electronics and accessories. I still haven't gotten rebates from June, either.
 
Is this ASI the same ASI distributor out of the Atlanta area? They are one of my 2nd-string goto distributors if I need something.
 
Most of the things in my attic are stored in Newegg boxes. Oh the business they used to get from me, but like others in this thread, I have moved on.
 
I have yet to find any place, even Amazon, with more consistent lower pricing than Newegg. I pay for Premier and with some of the free shipping on things like cases, it pays for itself in a month flat. Plus I don't get bent over on taxes, now that Amazon has a [useless] shipping warehouse in Central FL that effs me on taxes and doesn't get me products up here to NW FL any faster than Newegg can. [I can tell you all of a story of ordering from Amazon, order shipped from Central FL warehouse, went to Georgia then back down to NW FL...]
 
I used to see this a lot when working at a lease funding company. An order for $12K in servers would come in as a $65K lease, which puts $53K into someone's pocket as case (if the invoice was fake, he pockets the whole $65K). First of the month rolls by, they default on the payment and walk away.

The aggravating part was how many of our people had in interest making these deals go through. These sales still counted for commissions and monthly numbers and could be sold off to other companies, and I was specifically told to not to check incoming applications for fraud, no matter how ridiculous the numbers. Easy money if you have enough cutouts on the paper trail.
 
Zamboni said:
The aggravating part was how many of our people had in interest making these deals go through. These sales still counted for commissions and monthly numbers and could be sold off to other companies, and I was specifically told to not to check incoming applications for fraud, no matter how ridiculous the numbers. Easy money if you have enough cutouts on the paper trail.
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for a moment there i was thinking you were selling subprime loans

haha
 
Newegg still makes it insanely easier to build and compare specs and etc when I am researching a new computer build since the entire site is geared toward that purpose. I could use newegg and then buy everything somewhere else I guess, but I value that part of the site and use it all the time so I generally support them by purchasing the majority of equipment from them. Sometimes I'll buy one or two big ticket items from the build on amazon if it saves me more than just a few bucks. As soon as Amazon starts listing *full* specifications of computer components with photos and etc, and allowing me to very easily search by those specs and compare between them, then maybe I'll make the complete switch.
 
Cobra said:
Newegg still makes it insanely easier to build and compare specs and etc when I am researching a new computer build since the entire site is geared toward that purpose. I could use newegg and then buy everything somewhere else I guess, but I value that part of the site and use it all the time so I generally support them by purchasing the majority of equipment from them. Sometimes I'll buy one or two big ticket items from the build on amazon if it saves me more than just a few bucks. As soon as Amazon starts listing *full* specifications of computer components with photos and etc, and allowing me to very easily search by those specs and compare between them, then maybe I'll make the complete switch.
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There are sites like PCHound which aggregate what you need from various sources. Some have very good information and reviews. I mostly end up ordering everything from Newegg for convenience as pricing tends to average out from the different sources. I only use it for personal purchasing and they haven't treated me badly yet. And occasionally I buy things from a local computer shop that has managed to stay in business for a very long time.
 
Cobra said:
Newegg still makes it insanely easier to build and compare specs and etc when I am researching a new computer build since the entire site is geared toward that purpose. I could use newegg and then buy everything somewhere else I guess, but I value that part of the site and use it all the time so I generally support them by purchasing the majority of equipment from them. Sometimes I'll buy one or two big ticket items from the build on amazon if it saves me more than just a few bucks. As soon as Amazon starts listing *full* specifications of computer components with photos and etc, and allowing me to very easily search by those specs and compare between them, then maybe I'll make the complete switch.
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The search feature on Newegg is great. When I worked a PC sales and service shop, we used Newegg to search and filter down to a specific part, copy the model then, apply it to our vendor site.
 
I would love to see the evidence of 300x inflation. Oughta be good for a laugh or two.
 
So company manages to trick Korean banks to the tune of a billion dollars, and now heads need to roll? Is that the gist of things?

Here's an idea, if you're giving out loans of that magnitude spend a little more diligence in looking at your client, I mean they practically give you a rectal exam when you want so much as a home loan, and that's tiny money.
 
I wonder how many here on HardOCP knew that Newegg was bought out from a Chinese firm several months ago.

I can only imagine that the price was high given Newegg's popularity.

Can't help but wonder if the company was sold/bought with this scheme already in mind? It all seems very convenient doesn't it.

The aftershocks of this remain to be seen.

Microcenter has been raising their prices substantially lately so I've had to again start using Newegg to save on Tax and a few dollars here and there.
 
sfsuphysics said:
So company manages to trick Korean banks to the tune of a billion dollars, and now heads need to roll? Is that the gist of things?

Here's an idea, if you're giving out loans of that magnitude spend a little more diligence in looking at your client, I mean they practically give you a rectal exam when you want so much as a home loan, and that's tiny money.
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You're making the assumption they didn't?

Sorry, Asian banks are even more restrictive than American banks in what and who they loan to.

As it's been reported, both parties were in on the scheme. To draw you a picture, one company, the buyer had purchase orders. The 2nd company, the seller also had purchase orders. I guess the banks could have put men in the bushes? lol. I'm sure there was a lot of other factors considered as well.

Personally I don't care as long as no one's pension is wiped, people don't lose their jobs and most importantly, Newegg doesn't close it's doors.
 
ir0nw0lf said:
I have yet to find any place, even Amazon, with more consistent lower pricing than Newegg. I pay for Premier and with some of the free shipping on things like cases, it pays for itself in a month flat. Plus I don't get bent over on taxes, now that Amazon has a [useless] shipping warehouse in Central FL that effs me on taxes and doesn't get me products up here to NW FL any faster than Newegg can. [I can tell you all of a story of ordering from Amazon, order shipped from Central FL warehouse, went to Georgia then back down to NW FL...]
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Probably an air delivery and transferred to ground via Atlanta International. That doesn't seem odd at all since they probably didn't fly the plane up to ATL just for your delivery... Amazon isn't stupid in their logistics me boy.
 
Vader1975 said:
Isn’t Newegg Chinese now?
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Yeah, and if we go back to that thread I think you'll find a number of us who predicted something like this was only a matter of time now.

Still, the article didn't have enough details to determine fault.

1.) We're these actual Newegg invoices, or were they edited in some way to make it appear as if they were larger than they actually we're? Invoices are just a piece of paper. You could scan and tamper with that shit six ways to Sunday.

2.) If these were actual Newegg invoices, who knew what and when? Was this just some line wolf in the ordering department out to make a quick buck for himself, misusing company systems in the process, or was there organizational awareness?

With Chinese ownership, I wouldn't put anything beneath them, but let's not jump to conclusions.
 
WorldExclusive said:
I rather pay sales tax on Amazon than to buy from Newegg.
I order a lot from B&H as well.
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I just buy from whoever has the lowest total price (including shipping and any taxes and fees) at the time I am looking to buy.

When I need something really fast, this is usually my local Microcenter. If I need something within a day or two, Amazon usually wins due to my prime membership.

Other than that, I buy from any number of retailers.

When buying from Amazon or Newegg though, I usually try to opt for parts sold by either Amazon or Newegg directly. I don't trust their marketplaces unless I absolutely have to.
 
haste. said:
Probably an air delivery and transferred to ground via Atlanta International. That doesn't seem odd at all since they probably didn't fly the plane up to ATL just for your delivery... Amazon isn't stupid in their logistics me boy.
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In the long run the reason doesn't honestly matter to me, I don't order from Amazon enough to worry. Just doesn't seem to make much sense having a shipping warehouse in the same state only to have the items getting shipped outside of the state and another direction first.
 
Zarathustra[H] said:
I just buy from whoever has the lowest total price (including shipping and any taxes and fees) at the time I am looking to buy.

When I need something really fast, this is usually my local Microcenter. If I need something within a day or two, Amazon usually wins due to my prime membership.

Other than that, I buy from any number of retailers.

When buying from Amazon or Newegg though, I usually try to opt for parts sold by either Amazon or Newegg directly. I don't trust their marketplaces unless I absolutely have to.
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Just got burned on a marketplace deal (bad camera lens) but Amazon resolved it within two days. Good seller but resulted in a bad transaction.
I bought more stuff and made sure it was sold by Amazon, or at a minimum fulfilled by Amazon.

I pay more for Amazon's customer service. They seem to use common sense.
Whereas with Best Buy, they make it increasing difficult to do business with. 15 days return with 15% restocking.

I like Newegg for computer cases and new video card releases. Everything else I get from Amazon, B&H or local.
 
I never knew they were bought you. Did Hard put up a article about it?

I still visit and buy things from Newegg. Never had issues from them. Always positive. I do look for lower prices when I build. But if it's easier I try to buy from one source.
 
Hi All

Like many here, I started out purchasing all of my computer parts from Newegg. However, over the last 4 years, I've pretty much stopped using Newegg in favor of B&H Photo & Microcenter.
 
A few years back I started noticing that good hard drives like WD Reds were getting terrible reviews on Newegg. It was the crappy way they shipped them that cause the issues apparently. They were also infamous for sending you a motherboard with bent pins and then refusing to take it back. I used to love them.
 
I still buy a lot from Newegg. On a few rare occasions, a component is cheaper on AMazon, or in stock there and not at Newegg. Living close to one of Newegg's distribution facilities, if it comes from that warehouse, I get it with their standard shipping just as fast as I get Amazon Prime items. The only gamble is that you can't tell ahead of time where it will come from, which often leads me to getting a whole computer minus the CPU or minus the RAM in 2 days.
Newegg did get slightly annoying when they added the "marketplace" stuff. I did get something through a Marketplace seller once, totally by accident. It worked, and was insanely cheap, but took forever to ship. After that I remembered to check the box that says Sold by Newegg and thus eliminates the Marketplace sellers.
 
jpcahn1 said:
A few years back I started noticing that good hard drives like WD Reds were getting terrible reviews on Newegg. It was the crappy way they shipped them that cause the issues apparently. They were also infamous for sending you a motherboard with bent pins and then refusing to take it back. I used to love them.
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Don't be so quick to drop Newegg - I NEVER got a hard drive DOA from them, or improperly packed. Unlike TWO (one the replacement for the one I returned!) from Amazon. First one came with drive in static bag, in a box 3x the size of the drive, with one air pillow - as in, the drive freely rattled around in the box. I didn;t expect it to be any good, and lo and behold when I hooked it up - not even detected. Called Amazon, did the return process, I SPECIFICALLY mentioned the poor packing. They shipped me a new one - and it came packed exactly the same way! This one though at least worked, no SMART errors, and it survived an overnight full test, so I just left it in - all data on it is replicated to other drives in my system so if it dies it won;t be the end of the world. 24/7 8 months ago and it's still fine. No idea what they are thinking packing a drive like that. Every drive I ever ordered from Newegg came in a static bag then wrapped in bubble wrap and then packed in peanuts.
 
Newegg ain't never been the same since that Chinese company "Hangzhao Liaison Interactive Information Technology Co., Ltd" (or whatever they are called) bought their asses. I miss Newegg from like 10+ years ago.
 
There was info on here about Newegg being sold. Can't remember if it was front page but definitely read it here.
 
jpcahn1 said:
A few years back I started noticing that good hard drives like WD Reds were getting terrible reviews on Newegg. It was the crappy way they shipped them that cause the issues apparently. They were also infamous for sending you a motherboard with bent pins and then refusing to take it back. I used to love them.
Click to expand...


Yep, this was a well known issue at the time. They have since addressed it though, according posters responding to my question in the storage subforum.

I just went ahead and ordered two drives from them last week. The packing wasn't perfect, but it was much better than it used to be, and the drives passed four passes of badblocks, (over 115 hours of reading and writing each) so I guess they are OK.
 
jtm55 said:
Hi All

Like many here, I started out purchasing all of my computer parts from Newegg. However, over the last 4 years, I've pretty much stopped using Newegg in favor of B&H Photo & Microcenter.
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I like having B&H as a fourth alternative (to Amazon, Microcenter and Newegg). I used to order from them a lot back in the day when I was hardcore into photography. I keep forgetting to check them these days, as I guess my brain associates them with "a photo place".

Each have their deals on occasion.

Here is my overall take on the comparison of the four:

- Microcenter is great for their CPU & Motherboard combos which tend to beat everyone in price. They are great for "OMG, I'm in the middle of a build and I forgot to get X" type of issues too, since they are local. Pricing can otherwise be a little higher than the others though.

- Amazon is great for their generally good prices and fast shipping, especially if you have Prime. The only down side is their fuzzy search logic, which can make you accidentally buy the wrong thing, if you don't read your results very carefully. Another downside is that I can't pay with Paypal.

- Newegg is almost like Amazon. They leapfrog eachother on pricing, but Amazon is usually marginally better. Shipping is slower, but their search is much better avoiding the fuzzy logic problems, as well as providing much better filtering options. Paypal is an option at checkout, which is a positive.

- B&H usually has higher prices than either Amazon or Newegg, but occasionally they have a good deal. Their used section can sometimes be a goldmine. Paypal checkout is a positive as well.
 
Zarathustra[H] said:
I like having B&H as a fourth alternative (to Amazon, Microcenter and Newegg). I used to order from them a lot back in the day when I was hardcore into photography. I keep forgetting to check them these days, as I guess my brain associates them with "a photo place".

Each have their deals on occasion.

Here is my overall take on the comparison of the four:

- Microcenter is great for their CPU & Motherboard combos which tend to beat everyone in price. They are great for "OMG, I'm in the middle of a build and I forgot to get X" type of issues too, since they are local. Pricing can otherwise be a little higher than the others though.

- Amazon is great for their generally good prices and fast shipping, especially if you have Prime. The only down side is their fuzzy search logic, which can make you accidentally buy the wrong thing, if you don't read your results very carefully. Another downside is that I can't pay with Paypal.

- Newegg is almost like Amazon. They leapfrog eachother on pricing, but Amazon is usually marginally better. Shipping is slower, but their search is much better avoiding the fuzzy logic problems, as well as providing much better filtering options. Paypal is an option at checkout, which is a positive.

- B&H usually has higher prices than either Amazon or Newegg, but occasionally they have a good deal. Their used section can sometimes be a goldmine. Paypal checkout is a positive as well.
Click to expand...

Hi All

A pretty fair assessment however, I think you'll find with B&H Photo their prices compare or come under Neweggs. Can't say for sure with Amazon, as I haven't purchased computer/photo gear from them
 
TFA is light on details. It will be interesting how this one plays out. Wonder if the Chinese buyers of Newegg had any idea this was in the works? If not, expect some lawsuits from China targeting the former owners of Newegg.
 
Huh. I still use them but not for anything too major. I bought a couple monitors maybe 4 or 5 years ago. Since then, it's been random stuff they have on sale like power supplies, cases etc.
 
Today's Newegg Promo email is titled "The Dark Side of the Egg". Too soon?

LB_01.jpg
 
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