Computer hardware etail giant Newegg has been hit with a lawsuit from four South Korean banks alleging that the company knowingly participated in a scheme to defraud billions of dollars in loans given to Korean hardware manufacturer Moneual.
Following an investigation into the operation of Moneual, an investigation which has since seen the company's chief executive Hong-seok Park jailed for 23 years - reduced to 15 on appeal - for his part in the scheme, evidence of a $3 billion (around £2.28 billion) fraudulent loan application scam came to light. In the scheme, investigators claim, Moneual received hardware orders from Newegg and wholesaler ASI Corporation for home theatre equipment at hundreds of times their market value then used these fraudulent orders to apply for loans from ten banks. Unsurprisingly, the company then defaulted on several of these loans before eventually running up a half-billion dollar tab to the banks.
Neither company has issued a public statement on the filing, which seeks a jury trial and monetary damages.