Industrial Bank of Korea, Nonghyup Bank, Keb Hana Bank and Kookmin Bank are suing now Chinese owned US based online retailer, Newegg, and computer technology distributor, ASI Corp, for allegedly aiding now defunct Korean hardware maker, Monseual, in a Ponzi scheme which defrauded its lenders approximately half a billion dollars and landed the CEO of Monseual, Hong-seok Park, 23 years in prison.
The four South Korea based banks allege that Newegg and ASI helped Monseual secure fraudulent loans by making big purchase orders for Monseual’s products at 300x their actual market value and subsequently receiving kickbacks for their help. As many lenders make loans based on a company’s revenues and projected revenues, this helped drive up the value of Monseual which allowed the company to secure as much as $3 billion in loans from as many as 10 major Korean banks.
Currently the banks are demanding a jury trial and are seeking monetary compensation. The banks allege that Newegg and ASI owe $230 million for fraudulent orders Newegg and ASI made to Monseual that were financed by the banks.
Source: LA Times