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Newegg in Hot Water

The LA Times reports that four South Korean banks have filed lawsuits against NewEgg, alleging the company engaged in a Ponzi scheme intended to defraud the banks out of millions of dollars (thanks Gizmodo). The suit was filed in U.S. District Court in Los Angeles, accusing Newegg and computer wholesaler ASI Corp. of making fraudulent orders for home-theater personal computers from Korean hardware manufacturer Moneual. Moneual is said to be the architects of the scheme, and they are using these phony orders to secure bank financing. Here's word:

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.

“No such business would have bought the products at such an inflated price, unless it intended to create the illusion of extensive, profitable, high-value commerce between it and its supplier for the purpose of defrauding lenders into supporting the transactions,” the complaint said.

Newegg did not immediately respond to a request for comment.

The plaintiffs demand a jury trial and monetary damages. The lawsuit alleges that, of the orders Newegg and ASI made to Monseual that were financed by the banks, more than $230 million is still owed.

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36. Re: Saturday Safety Dance Oct 24, 2017, 21:23 NKD
 
jdreyer wrote on Oct 24, 2017, 21:05:
NKD wrote on Oct 24, 2017, 19:26:

I always buy the listing that says "Ships from and sold by Amazon.com." so that I can get my free Prime shipping. If it comes from another retailer it will say, and you won't get Free Prime Shipping unless they have Amazon doing their fulfillment (i.e. the product sits in an Amazon warehouse.)
So still packed and shipped by slave labor.

I do imagine that moving boxes around a warehouse is a pretty low paying job, and one that probably won't exist for much longer.
 
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35. Re: Saturday Safety Dance Oct 24, 2017, 21:05 jdreyer
 
NKD wrote on Oct 24, 2017, 19:26:

I always buy the listing that says "Ships from and sold by Amazon.com." so that I can get my free Prime shipping. If it comes from another retailer it will say, and you won't get Free Prime Shipping unless they have Amazon doing their fulfillment (i.e. the product sits in an Amazon warehouse.)

So still packed and shipped by slave labor.
 
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34. Re: Saturday Safety Dance Oct 24, 2017, 20:17 MacLeod
 
NKD wrote on Oct 24, 2017, 19:26:
I always buy the listing that says "Ships from and sold by Amazon.com." so that I can get my free Prime shipping. If it comes from another retailer it will say, and you won't get Free Prime Shipping unless they have Amazon doing their fulfillment (i.e. the product sits in an Amazon warehouse.)

That's actually changing now... I've seen listings lately that will have the "Prime" tag and guaranteed 2-day delivery date, but still "sold by and shipped from (vendor)".

Apparently this has been something they've been testing since 2015, on an invite-only basis. I'm guessing it's going wider that I've actually seen it now.
 
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33. Re: Saturday Safety Dance Oct 24, 2017, 19:26 NKD
 
Rigs wrote on Oct 24, 2017, 19:15:
NKD wrote on Oct 24, 2017, 19:08:
D4rkKnight wrote on Oct 24, 2017, 18:46:
Newegg isn't the Newegg anymore, they were sold to the Chinese. My credit card company flags purchases from them as potentially fraudulent.

Try pcpartpicker.com. They do price comparisons across multiple sites.

Yeah I think some Chinese company got majority share in Newegg ownership about a year ago. But Newegg started struggling long before that.

I basically get all my computer hardware off Amazon now. They are usually the lowest or close to the lowest price and I get free shipping so...

You buy from Amazon but most times, like NewEgg now, you're buying from resellers that post ON Amazon (and NewEgg). That's why you have a selection of prices. And any one of those resellers could be some sweat factory in Cambodia for all anyone knows.

I always buy the listing that says "Ships from and sold by Amazon.com." so that I can get my free Prime shipping. If it comes from another retailer it will say, and you won't get Free Prime Shipping unless they have Amazon doing their fulfillment (i.e. the product sits in an Amazon warehouse.)
 
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32. Re: Saturday Safety Dance Oct 24, 2017, 19:15 Rigs
 
NKD wrote on Oct 24, 2017, 19:08:
D4rkKnight wrote on Oct 24, 2017, 18:46:
Newegg isn't the Newegg anymore, they were sold to the Chinese. My credit card company flags purchases from them as potentially fraudulent.

Try pcpartpicker.com. They do price comparisons across multiple sites.

Yeah I think some Chinese company got majority share in Newegg ownership about a year ago. But Newegg started struggling long before that.

I basically get all my computer hardware off Amazon now. They are usually the lowest or close to the lowest price and I get free shipping so...

You buy from Amazon but most times, like NewEgg now, you're buying from resellers that post ON Amazon (and NewEgg). That's why you have a selection of prices. And any one of those resellers could be some sweat factory in Cambodia for all anyone knows.

I wasn't aware NewEgg was bought out, I have been using them since the earliest days. Well, them and mWave in Cali. I only stopped using mWave because they were so far away and it took almost a week for parts to get here in FL via ground unless I paid $20 more for 2-day or overnight. (And typically, for some reason, it'd be on a Thursday or Friday, which negates both of them since we don't get weekend service out here in the middle of fucking nowhere) I recently grabbed a 250gb SSD from NewEgg for a pretty decent price and I had no problems, it was here in a day. So until I have problems with them, I'll probably continue to use them. *shrugs*

=-Rigs-=
 
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31. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 19:08 NKD
 
D4rkKnight wrote on Oct 24, 2017, 18:46:
Newegg isn't the Newegg anymore, they were sold to the Chinese. My credit card company flags purchases from them as potentially fraudulent.

Try pcpartpicker.com. They do price comparisons across multiple sites.

Yeah I think some Chinese company got majority share in Newegg ownership about a year ago. But Newegg started struggling long before that.

I basically get all my computer hardware off Amazon now. They are usually the lowest or close to the lowest price and I get free shipping so...
 
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30. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 18:46 D4rkKnight
 
Newegg isn't the Newegg anymore, they were sold to the Chinese. My credit card company flags purchases from them as potentially fraudulent.

Try pcpartpicker.com. They do price comparisons across multiple sites.
 
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29. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 18:13 Mr. Tact
 
jdreyer wrote on Oct 24, 2017, 16:32:
Right, the opposite actually. They were one of the few companies to stand up to patent trolls instead of taking the easy way out of paying them off. I'd be surprised if they were actually intentionally involved with this. I guess we'll see.
I would have agreed. However finding out they were sold about a year ago or so really changes things...
 
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28. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 16:53 jdreyer
 
Mordhaus wrote on Oct 24, 2017, 14:59:
.

I have to wonder why the banks didn't catch this. I mean if I go to a bank and say, "Hey, I am going to be building and selling a bunch of basic computers, I already have a buyer, and each computer is selling for 20 thousand so I need some capital to get them built", what idiotic bank employee would give away millions without challenging that cost?
I've noticed that Asian banks and the companies they do business with often have cozy relationships. Deals can often be sealed with a handshake and the trust is more important than due diligence. It's a huge dishonor to intentionally defraud. I wonder if that is the case here.
 
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27. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 16:32 jdreyer
 
Mr. Tact wrote on Oct 24, 2017, 11:28:
Seems odd, never previously seen any indication NewEgg was anything other than a normal, reasonable business. It will be interesting to see how it plays out. Although the lack of an immediate denial is a bad sign... maybe they made a bad play of some kind and got themselves in financial trouble and this was their bad plan to get out of it. Time will tell....
Right, the opposite actually. They were one of the few companies to stand up to patent trolls instead of taking the easy way out of paying them off. I'd be surprised if they were actually intentionally involved with this. I guess we'll see.
 
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26. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 16:17 Mr. Tact
 
I bought some hard drives from them probably 18 months ago or so. My electronics purchases have slowed some in recent years....  
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25. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 16:17 Kxmode
 
It sounds less like a Ponzi Scheme and more like money laundering. A Ponzi Scheme would be if NewEgg promised customers generous rebates in exchange for paying for said generosity. Newegg would then give the money they obtained from newer participants to participants who joined the system earlier.  
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24. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 16:15 Dr donkles
 
Used to always use Newegg for complete PC builds. They've gone downhill for ages now.

Last 2 new products I ordered, both were opened and used. Complaining led me to a chat where an agent didn't even give a shit and offered no help, as the 2nd order wasn't even them.

Don't order from them at all anymore.
 
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23. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 15:56 Zanderat1
 
RedEye9 wrote on Oct 24, 2017, 12:26:
Zanderat1 wrote on Oct 24, 2017, 11:38:
From the same story cited by Blue, "...."
Shame on Blue for omitting this.
All blue does is post the links. So SHAME SHAME SHAME on you for actually reading the article.

I hope this does not affect NewEgg in any way, shape or form. I have spent thousands of dollars with them and would like to continue that relationship. I especially enjoy the fact that I don't have to pay tax, unlike w/my Amazon purchases.
Yup. If switch to Micro Center, then I am paying sales tax again....
 
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22. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 15:48 Retired
 
BYE Bye new egg  
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21. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 14:59 Mordhaus
 
Based on the timeline outlined in the article, this would have had to go down prior to the sale of Newegg. The article states that it has been 2 years since they convicted the Korean side people and are just now getting around to Newegg.

If that is correct, it makes me wonder if the previous owners just decided to get as much money as they could prior to SHTF. Do the fraud, sell the company, and head to a non-extradition nation to drink Pina Coladas.

I have to wonder why the banks didn't catch this. I mean if I go to a bank and say, "Hey, I am going to be building and selling a bunch of basic computers, I already have a buyer, and each computer is selling for 20 thousand so I need some capital to get them built", what idiotic bank employee would give away millions without challenging that cost?
 
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20. Re: Morning Tech Bits Oct 24, 2017, 14:57 Mordecai Walfish
 
Smart builders never ordered *everything* from newegg. Plenty of good sites with varying deals/prices.. it's always been a mix-up of about 5 different sources. If you have a Micro Center nearby that is a great source too. Best b&m by a long shot. That said, Newegg certainly has gone downhill on their pricing.. either that or everyone else caught up.  
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19. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 14:49 NKD
 
Peter M. Smith wrote on Oct 24, 2017, 14:31:
A Ponzi scheme requires new investors to come in, using their investments to pay the old investors. I'm not sure where we're seeing that with Newegg. Now Hong-Seok Park *was* convicted of operating a Ponzi scheme, but this issue with Newegg looks like a garden variety case of fraud.

Yeah I'm not seeing the Ponzi scheme element either, unless I'm missing something. There aren't even any investments involved, just defrauding lenders...
 
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18. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 14:31 Peter M. Smith
 
A Ponzi scheme requires new investors to come in, using their investments to pay the old investors. I'm not sure where we're seeing that with Newegg. Now Hong-Seok Park *was* convicted of operating a Ponzi scheme, but this issue with Newegg looks like a garden variety case of fraud.  
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17. Re: Newegg Accused of Ponzi Scheme Oct 24, 2017, 13:58 Beamer
 
Newegg was partially sold last year, right, with that 55% stake becoming a 97% stake this year?

Do you guys really think Newegg turned terrible in the last 14 months? For me, it's more like last decade.
 
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