Finely chop the mushrooms, onion, and scallions. Combine all the meatball ingredients well by hand until evenly blended.
Shape the mixture into about 1 1/4-inch balls. Dredge the meatballs in the cornstarch or flour to lightly coat.
Heat a tablespoon of oil in a pan over medium heat. Add half of the meatballs to the pan. Turning as necessary, fry until all sides are golden brown but not cooked through, about 5 minutes. The meatballs will finish cooking in the sauce. Remove from the pan and repeat with the remaining meatballs.
Add all the sauce ingredients to another pan. Boil over medium heat until the sauce is slightly thickened, about 3 – 4 minutes.
Add the meatballs to the sauce and simmer until the sauce becomes a thick glaze, turning to coat evenly, about 5 minutes. Sprinkle with the optional garnish. Serve warm with your choice of vegetables.