This month is not starting very well for technology enthusiasts. Most of us have fond memories of Zalman, a company that has been producing advanced cooling solutions since 1999. Some are old enough to remember the fan-like CNPS6000 Socket 370 coolers and the first Reserator liquid cooling kits. Zalman was one of the pioneers of low-noise cooling solutions, in an era when stock coolers were noisy enough to drive people insane. Unfortunately for us all, on November 3, 2014 the company filed a bankruptcy protection request in the Seoul Central District Court.

Zalman did not fall victim to recession, competition or even bad corporate management. The whole story is long, complicated, obscure and yet unconfirmed, so unfortunately we may never learn all the details of it. To summarize, Zalman apparently was part of an allegedly very well designed and planned multi-billion dollar corporate fraud.

Zalman is a child company of the robotics manufacturer Moneual. According to The Korea Times, Moneual failed to repay their (massive) export bonds that matured on October 20, 2014, and ultimately filed for bankruptcy. Ever since that incident, Zalman's stock price also began a quick downfall. However, the numbers just do not add up - Moneual has been repeatedly reporting major profits, with their 2013 annual report being nearly 1.2 billion dollars in sales and over 100 million dollars in profit. The local authorities naturally became very suspicious and initiated investigations, the preliminary reports of which indicate that there is evidence of a well-designed corporate fraud.

Long story short, Moneual allegedly acquired Zalman in 2011 as part of their master plan. They forged Zalman's export and accounting documents, greatly overstating their export and income reports, in order to become eligible for huge bank loans. What is even more interesting is an article posted by the Korea JoongAng Daily, where an employee claims that most of the employees knew that the company was a sham but, despite the unearthly profit reports of the past few years, no government officials raised an eyebrow.

During that time, Moneual received about 620 million dollars in loans from several Korean banks and another 275 million dollars as export credit from the Korea Trade Insurance Corp, making the owners of Moneual richer by nearly 900 million dollars, money that will likely never be repaid. They have been arrested and, alongside many top- and mid-level executives of the company, are now facing prison time. Unfortunately, the architects of this fraud may not receive what punishment they deserve; the CEO of Moneual has U.S. citizenship and his brother has Canadian, and there's some concerns that Korean law could face trouble prosecuting them.

Unfortunately, we have little confirmed information on the matter but, from the looks of it, no one from Zalman was involved in this fraud. Depending on the court's decision, there is the possibility that Zalman will be granted bankruptcy protection and severed from Moneual's control. However, even if that happens, Zalman will certainly not have the capabilities they used to and will most certainly struggle to compete on a global scale.  

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  • jardows2 - Friday, November 7, 2014 - link

    I like the restitution model for cases like these. Make them pay back everyone they took unjustly from, with a set percentage over for punishment. They stole 900 million dollars, they have to pay back to the people they stole from something like 1.5 billion. If they can't pay, we'll make them work it off.
  • Flunk - Thursday, November 6, 2014 - link

    I hope they get bought out by Corsair or one of the other more-reputable PC cooling companies.
  • Da W - Thursday, November 6, 2014 - link

    Even in bankrupcy, Zalman's assets and IP can be purchassed at bargain price by a competitor and the glourious days of quality cooling solution can continue.
  • jhoff80 - Thursday, November 6, 2014 - link

    Even Moneual actually had some nice looking PC cases back in the day. My previous HTPC case was by them... but things seemed fishy to me (obviously not on the scale of this, just that it was an odd thing I noticed) when I couldn't find any of their drivers anywhere on their own page, and they instead only showed the robotics stuff.
  • gammaray - Thursday, November 6, 2014 - link

    this is interesting, everyone should do it. start a company, forge the books, pretend massive profits and high margin, get huge loans from banks, sell a gigantic amount of obligations and never repay them, when they investigate your company, just flee to russia or elsewhere with your new acquire billion wealth. Repeat 10 years later in another country or sell books to teach how to do it...Awesome!!!
  • Samus - Thursday, November 6, 2014 - link

    :( very sad.
  • Keisari - Thursday, November 6, 2014 - link

    Oh man, no! Not Zalman!
    A quality company like that... it's such a waste.
    And dat flowery heatsink... I had one for my Athlon, a decade ago. Memories...
  • surfnaround - Monday, November 10, 2014 - link

    bolting a 1.5 pounds of copper onto your CPU!... oh yeaaa! grunt,grunt...
    i due love those zalman coolers... expensive now, but none are prettier than zalman... sadly while i have almost all of the old HSF, the fans on them were a bit noisy. do wish they would release a 1150/1155 socket retention kit for the old "poundage heatsinks"... i have to resort to zip ties lol zip tieing 1.5 pound of copper to a heatsink (with a mod'ed noctua 25 dollar fan in the center)...
  • GenSozo - Friday, November 7, 2014 - link

    AMD should dig through their couch for the funds and buy Zalman out. Then they might ship good CPU coolers with their processors at last. :)
  • Doh! - Sunday, November 9, 2014 - link

    The real mastermind behind this fraud will never be extradited. The white-collar crime of this nature is rarely prosecuted to the full extent in Korea, especially when the alleged criminals have foreign citizenship and fled the country already. The prosecutors will just get on with arresting people in Korea and close the case. The extradition takes too much of their time and effort with very little results to show for at the end for this type of financial fraudulent case. I'm speaking from an experience of working with the Korea prosecutors in similar cases.

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