SEOUL, Oct. 31 (Korea Bizwire) – Sources within the financial industry reported on October 30 that a coalition of major South Korean banks consisting of KB Kookmin Bank, the Korea Exchange Bank and Nonghyup Bank had filed a $230 million suit against U.S. online retailer Newegg Inc and others in a Los Angeles district court on October 20.
The suit alleges that the defendants knowingly participated in defrauding South Korean banks by buying computers from Moneual Inc, a South Korean electronics company, at massively inflated prices, issuing orders for home theater PC units priced 300 times higher than the actual cost.
Moneual’s chief executive Park Hong-seok was convicted in South Korean court and given a 23-year jail sentence on October 16 that was later reduced to 15 years. The court also slapped him with a 100 million won fine as and additionally ordered him to forfeit 35.67 billion won.
In 2014, Moneual requested legal arbitration after defaulting on its bank loans, eventually declaring insolvency.
The home theater PC retailer had borrowed 3.4 trillion won from Korean banks by selling accounts receivable from U.S. retailers like Newegg.
The banks have already filed a lawsuit against the Korea Trade Insurance Corporation, which covered Moneual’s transactions, demanding insurance fees.