Just weeks after a business owner reselling used sneakers, The owner was accused of orchestrating a multi-million dollar Ponzi scheme, a court-appointed recipient is seeking to discharge nearly 60,000 pairs of shoes to raise funds for the victims.
Michael Malekzadeh, the former owner of Zadeh Kicks LLC, a now-defunct Oregon company that sells limited-edition sneakers and collectibles online, has been criminally charged with electrical fraud. On August 3, he attempted to commit bank fraud and money laundering, allegedly defrauding customers and financial institutions of $85 million.
According to court documents seen by Bloomberg, 59,780 pairs of shoes stored in a warehouse owned by the man once described as the “Bernie Madoff of sneakers” are now up for sale. price by a court-appointed recipient.
Among the first to go: about 1,100 pairs from Malekzadeh’s personal collection, new and used, according to court documents.
And in his heavily guarded warehouse are 4,746 Yeezys, 4,626 Adidas shoes, and 48,339 Nike shoes-a large part of which could be coveted Air Jordans. Many brands from Vans, Asics, New Balance, Converse, Puma, and Reebok are also included in the sale.
In total, experts told Bloomberg that the batch of shoes still packaged and labeled could be worth between $12 million and $20 million at best. Malekzadeh is accused of defrauding customers of over $70 million.
According to Bloomberg, the goal is to sell as many sneakers as possible as soon as possible in order to refund thousands of customers who the authorities say ordered the shoes but never received them. Experts warn that even if all the sneakers were sold, the proceeds would not cover what the victims were owed. Customers may not get their money back for months, if at all.
Federal prosecutors have charged Malekzadeh, 39, with a fraud scheme that allegedly cost customers more than $70 million in unfulfilled orders and defrauded organizations and financial institutions of more than 15 million dollars. Bethany Mockerman, Malekzadeh’s 39-year-old fiancée, is also accused of conspiring with Malekzadeh to commit bank fraud.
According to court documents, Malekzadeh started his business in 2013 by buying limited-edition sneakers and collecting them to resell them online.
As early as January 2020, Zadeh Kicks began offering pre-orders of the sneakers before the public release date, allowing Malekzadeh to pre-collect via PayPal or bank transfer prior to completing the order.
Malekzadeh advertised, sold, and collected money from customers for orders before learning he could not fulfill all of the orders placed, the allegation said.
An example given in court documents shows that in 2021, Malekzadeh will begin selling pre-orders of the Nike Air Jordan 11 Cool Gray sneakers. Malekzadeh received and accepted pre-orders for more than 600,000 pairs of sneakers, resulting in a payout for Malekzadeh of more than $70 million.
Malekzadeh had no way of obtaining the required number of sneakers to fulfill the pre-orders received. In fact, he could only afford over 6,000 pairs. Customers ended up with unfilled orders or received a refund that combined cash and Zadeh Kicks gift cards.
As of April 2022, Malekzadeh owes customers more than $70 million in undelivered sneakers, and millions more unidentified customers hold worthless corporate gift cards.
Court documents allege Malekzadeh spent more than 3 million dollars on pre-orders for luxury items, including luxury cars from Bentley, Ferrari, Lamborghini, Porsche, and Mercedes. Millions of dollars were paid to Louis Vuitton for handbags, luxury handbags, and other items, as well as large amounts of jewelry, some furs, and millions of dollars in watches ranging in value from a few thousand dollars to over 600,000.
Additionally, American Express filed a lawsuit against Malekzadeh and Mockerman in July seeking damages of $2 million and $3,000, respectively, as they sought to collect outstanding balances on three cards used by Zadeh Kicks and Mockerman.
