South Korean Banks Accuse Newegg, ASI Of Ponzi Scheme

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The old Newegg I would say no way I don't believe it. The Chinese owned Newegg (for about 1 year now) I just wont be giving them the shadow of the doubt like I would have. I have seen there service start to lack since the buyout and all things being equal I will buy from Amazon now.
 


They are saying they had xxx income from the hugely overpriced/over inflated sales and got xxx money from the bank because of how well they were doing. Where it falls apart and makes it a ponzi scheme is if the vendors didn't actually pay that which it sounds like they did not. It's more down to who doctored the purchase orders from Newegg and ASI.

My vote of who had the most to gain and using occam's razor as guidance is that the purchase orders were doctored by Moneual especially seeing two different companies with "fake" orders.

 

cia1413

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"They are saying they had xxx income from the hugely overpriced/over inflated sales and got xxx money from the bank because of how well they were doing. Where it falls apart and makes it a ponzi scheme is if the vendors didn't actually pay that which it sounds like they did not. It's more down to who doctored the purchase orders from Newegg and ASI.

My vote of who had the most to gain and using occam's razor as guidance is that the purchase orders were doctored by Moneual especially seeing two different companies with "fake" orders.
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That's not a ponzi-scheme.
 

bit_user

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I wonder if this is some sort of translation error. I agree with those saying it's not a ponzi scheme, since Newegg had nothing to gain by it (unless there were some kickbacks not mentioned in the article). The only way that Newegg and ASI should be culpable is if they submitted purchase orders knowing they wouldn't (all) be fulfilled. That would be financial fraud.

Probably the main factor fueling this litigation is the embarrassment of the banks that obviously didn't do their due diligence. I wonder how much of the investment they were able to recover, as a significant shortfall could also be driving them to fill the holes in their balance sheets.
 

One thing Newegg really does better though is product search. You can easily narrow down a list of components by just about any specification that might be important. I'm not entirely fond of them including marketplace sellers in the results by default, but at least they are easy to toggle off. Plus, Newegg provides a clear chart covering product specifications in detail for almost every product, and the pages tend to be clean and well sorted.

On Amazon, searching for many products, especially computer hardware, can be a lot more cumbersome. Not only are there few specifications to sort components by, but third-party sellers clutter the results, and the way results are presented is simply not as good. And unlike Newegg, many products lack a detailed specifications list, so you need to search for that information elsewhere, and overall, the product pages tend to be a cluttered mess. Amazon might be a decent place to buy computer components from, but the actual shopping experience is not particularly good.

It was also annoying how Amazon kept raising their free shipping limit over the last few years in an effort to push Prime. Thankfully, increasing competition encouraged them to drop it back down again. They first lowered it back down from $50 to $35 last winter, and then back down again to the original $25 this summer.
 

mrmez

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The investment money could have come from anywhere. Banks, companies, individuals.
Usually in such schemes, a tiny bit of that money is paid to certain investors or creditors to keep them hooked.
For example, maybe Bill Gates invests a bunch, so they pay him dividends. When people hear about that it lends credibility to the investment, and loads of people jump on board.

And if you don't know how a Ponzi scheme works... think of it on a small scale. Imagine going to the bank with a bunch of fake invoices from fake customers showing 10,000 have placed orders for $1,000 each. That's $10 million guaranteed income, but you need a $1 million loan to fill the orders. If the bank trusts you enough, it will grant the loan. You take the money an live like a baller. Eventually the bank comes calling for their money, but it's gone. It's fraud, but on a much larger scale.
 

bit_user

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The problem is that the article didn't say the banks' investment was used to pay off earlier-stage investors. I'm not saying it didn't, but that why people are confused.
 

mrmez

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True, but it doesn't change anything IMO.
If you steal $100M, what's the difference if you pay back $1M.
 

cia1413

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whether or not it's a PONZI-scheme
 

bit_user

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What it changes is whether it was actually a Ponzi scheme. In order to qualify as a Ponzi scheme, you need a situation where the earlier investors profit at the expense of later ones.
 

Tanyac

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Nothing would surprise me with NewEgg lately.
I purchased couple of motherboards. The first, weighing in at 2.78kg was charged shipping based on that weight. A couple of months later I bought another of the same board. This time they declared the weight to be over 5kg, and charged shipping based on the that weight. When it arrived, the weight was the same as the first - under 3kg. Overstating the weight to increased shipping charges is, if not illegal, then at least unethical. It took 4-5 weeks for their technical support to respond to my query which was pretty much a "tough luck" response.
 

jtown82

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As James mentioned. This seems reasonable being its own by a Chinese company. People think big companies in America are corrupt have never been to China or done research on their companies. They put Enron to shame.
 

MASOUTH

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as far as I can tell Moneual didn't run a Ponzi scheme so much as commit bank fraud. They were not using later investors to pay earlier investors as much as falsifying revenue data to continuously qualify for newer and larger bank loans that they were not actually qualified for. Specific to this article is that the banks are claiming that Newegg and ASI were knowingly involved in the fraud due to the exorbiant prices that they were issuing invoices for.

As far as people saying talking about the "new" and "old" Newegg....this occurred back in 2014 and earlier...this would be the "old" 'egg.
 

thundervore

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Wow. I remember shopping on Newegg back in the day building my first system and stuff. It was great as the prices were cheaper than Tiger Direct and Amazon and they didn't charge me state taxes since I wasn't shipping to CA, TN or NJ. Somewhere along the years I stopped shopping there and went to Amazon where I paid more on the items along with state taxes on all shipments.

Maybe it was when they started letting third party merchants in, or when they reduced free 3 day shipping on many things or when prices were no longer "low".

I miss the old Newegg.
 

phobicsq

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It's always great to see institutions get taken advantage of but it seems they are able to usually get better legal services... probably has something to do with having money.
 

FatalRob

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It’s really ironic in reading this today regarding newegg.i filed a complaint with them regarding “marked-up” prices.as a frequent online shopper/browser I noticed quite a discrepancy in their prices compared to other online stores.i decided to investigate more and research why this was.i contacted newegg (Canada) about this very situation and they basically gave me the runaround.serveral times I have noticed that their “sale” price (on select items) was just a few dollars off the “actual” retail price.i couldn’t believe what I was seeing so I contacted them as I stated above.i almost felt obligated to contact the competition bureau and file a complaint but I just figured I will not purchase anything ever again from them.buyer beware.they definitely do not conduct business in a fair or honest aspect.far from it.
Now,I’m not sure if this relates to this article,but once I read the title and a bit more,I felt the need to post my experiences and perhaps warn others.

Best regards!
 

bit_user

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They let you filter by seller, with a special option at the top for restricting to Newegg. How is this any worse than Amazon, who also has 3rd party sellers and lets you filter on them?

I still get many things I order within 48 hours. Probably within the last year, I got something in < 24 hours, after only ground shipping. So, they're still fast and often free. Just not dependably either... but I remember reading complaints over the years by people who claim to have paid for overnight shipping and expedited their order, only to sit and wait for half a week. So, I'm not sure this is any different.

As for low prices, they still typically have good prices, and often the best. Just use a price search engine like pcpartpicker to check. I now use them before all major PC part purchases, and it's saved me money a few times by sending me places like NCIX.

Unless you're a highly cost-insensitive individual, I don't see why you wouldn't at least check before buying on Amazon, whom I find costs the same or more than Newegg, more often than not.

All of that being said, it does slightly worry me that they're Chinese owned. I didn't know that. I have no specific concern, but I'd imagine there's some strategy behind it - like to introduce new Chinese computer & electronics brands directly into the market and @ lower cost than if they had to go through 3rd party channels.
 

bit_user

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That's just short-sighted. When a big company gets sued, more often than not, we all foot the bill through higher costs for the goods and services we buy. If not directly (as in the case of those of us who shop at Newegg), then indirectly through the insurance rates that corporations pay.

Not that I'm trying to defend institutions, but you know that two wrongs don't make a right. And, for all I know, the South Korean financial sector is better regulated than elsewhere.

Whenever you find yourself cheering for criminals, you should stop and ask yourself "what's wrong with this picture?"
 

FatalRob

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Ummmm...if you read what I wrote perhaps you would have a better understanding rather then reply with your sarcasm..I said I do browse around and compare prices.their prices are Marked-up.i can provide you with evidence if needed.now maybe other items are within similar prices etc but MY experience with them is their BS!!! And no I’m not price “sensitive” as you stated..I just don’t like getting ripped of from misleading prices from this junk site.hows that?


 
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