Zadeh Kicks bankruptcy
The Man Behind the $85 Million Nike Ponzi, If the Shoe Fits Zadeh Kicks
Greed from head to foot
I was never into shoes, a lot of it comes from when I was younger — I never had more than a pair of shoes. And I thought everyone was the same, their school shoes were also their all-around shoes.
I never had a Nike; I find it too expensive. I only had an original when a cousin from the US gave me his old pair.
When China became a manufacturing powerhouse, from where I’m from, the streets started to be flooded with knock-offs, and that is also true around Southeast Asia.
But there will always be people who would do anything and everything to own an original.
An Air Jordan is more than a pair of Nike, it is part of their identity — the indulgence in products such as Starbucks, Apple’s iPhone, and Nike’s Air Jordan is common with people who derive pleasure from branded stuff.
I’m just not one of them.
Zadeh Kicks owner and the chief financial officer charged in $85 million wire fraud and bank fraud conspiracy — Department of Justice
If it’s too good to be true, it must be a scam.
And that is what the Department of Justice believes now that the Zadeh Kicks owner and its CFO have been charged with wire fraud and bank fraud conspiracy.
They also happen to be a real-life couple.
Michael Malekzadeh, 39, a Eugene resident, has been charged by criminal information with wire fraud, conspiracy to commit bank fraud, and money laundering. Bethany Mockerman, 39, also of Eugene, has been charged with conspiring with Malekzadeh to commit bank fraud. — DOJ
If there is a Bonnie & Clyde of Crypto — Heather “Razzlekhan” Morgan and Ilya “Dutch” Lichtenstein who was found to have $3.9 billion worth of Bitcoin as part of the $4.5 billion worth of stolen Bitcoin in 2016 from Bitfinex, meet the Bonnie & Clyde of Sneakerhead scam.
And if the DOJ prosecutors can prove in court that the two had defrauded thousands of sneakerheads and banking institutions by falsifying financial documents to procure loans used to cover up the alleged Ponzi scheme behind Zadeh Kicks, the two could end up in jail just like Bernie Madoff.
One must remember that a jury found Bernie Madoff guilty of fraud in running a Ponzi scheme that for decades many people thought was a legitimate business investment.
He was serving his 150-year jail term when he died in prison and six of his close associates were sentenced as part of the conspiracy to defraud investors of billions of dollars.
Bethany Mockerman can’t claim to be an innocent bystander as the courts already had a precedent in the Madoff case that a Ponzi scheme can’t happen without a conspiracy.
And Bethany was not only the company’s CFO, she was Malekzadeh’s girlfriend.
Michael Malekzadeh and Bethany Mockerman can see themselves locked up for at least 25 years or more, the same jail term that the Bonnie & Clyde of Crypto could be facing once their case goes into trial.
Zadeh Kicks
In the press release issued by the Department of Justice dated August 3, 2022 — Fraud victims are asked to submit loss information to the FBI via their website, FBI.gov/ZadehKicks to complete a brief online questionnaire.
Seeking Victims in Zadeh Kicks Investigation
The FBI’s Portland Division is seeking potential victims in an investor defrauding scheme.
Michael Malekzadeh owned and operated a company called Zadeh Kicks between 2013 and May 20, 2022, in which he acquired and resold footwear. Many customer orders were never filled or reimbursed. On May 20, 2022, Zadeh Kicks was placed into court ordered receivership in Lane County, Oregon.
If you believe you were a victim in this case please complete this brief questionnaire. Your responses are voluntary but would be useful in the federal investigation and to identify you as a potential victim. Based on the responses provided, you may be contacted by the FBI and asked to provide additional information.
The FBI is legally mandated to identify victims of federal crimes that it investigates and provide these victims with information, assistance services, and resources. — DOJ
Some key points in the press release — Source: Department of Justice U.S. Attorney’s Office, District of Oregon
- Michael Malekzadeh, 39, and Bethany Mockerman, 39, also of Eugene, Oregon have been charged with conspiring with Malekzadeh to commit bank fraud.
- The couple made their first appearances in federal court today after being charged with perpetrating a fraud scheme that allegedly cost customers more than $70 million in unfulfilled orders and defrauded financial institutions out of over $15 million.
- In 2021, Malekzadeh began selling preorders of Nike Air Jordan 11 Cool Grey sneakers. Zadeh Kicks received and accepted preorder sales of over 600,000 pairs of sneakers, resulting in payments to Malekzadeh of more than $70 million.
- Malekzadeh had no way of acquiring the quantity of sneakers needed to fill the preorders received. In fact, he was only able to acquire just over 6,000 pairs. Customers were either left with unfulfilled orders or they received a combination refund of cash and Zadeh Kicks gift cards.
While the two defendants are presumed innocent until the courts find them guilty, in the course of the investigation based on criminal information, FBI had seized in their possession luxury items such as 100 watches, some valued at over $400,000, jewelry, and hundreds of luxury handbags.
The government also seized nearly $6.4 million in cash which was the result Malekzadeh’s sale of watches and luxury cars manufactured by Bentley, Ferrari, Lamborghini, Porsche, and others. — DOJ
Who is Michael Malekzadeh?
Michael Malekzadeh is a sneakerhead, no doubt about it.
If the allegations against him are proven in court he is also a con man. In the submitted court documents the charges include;
MICHAEL MALEKZADEH did knowingly devise and intend to devise a scheme and artifice to defraud and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises. — Public court documents
His company Zadeh Kicks comes from his last name Malekzadeh, there isn’t much information one can find about him over the Internet, and for someone who has been in the business of selling shoes to thousands of sneakerheads that is quite odd.
A sign that many of his so-called victims missed because a majority of them were speculators, out to make money from dipping their fingers in the growing sneaker arbitrage market.
The secondary market for hard-to-find NBA basketball shoes like the ones the legendary Michael Jordan wore during his reign as NBA’s undisputed king exploded.
It happened after the Netflix documentary about his last championship year with the Chicago Bulls was streamed during the height of the pandemic.
The Last Dance became ESPN’s most-watched documentary ever, with 5.4 million people tuning in to watch it.
And it only helped create the hype on the re-release of the Air Jordan 11 Retro Cool Grey.
As for Zadeh Kicks it was an opportunity to take advantage and take as many pre-orders as it can take on its website which has since been deleted on the web, and offer discounts below the SRP from established retailers.
The deal was too good to be true and for the speculators, their greed took the better of them.
Some had used the money given by the US government to tide them over during the pandemic, to buy Air Jordan rather than buy food for their families.
A lot of these sneakerheads used their credit cards to make a purchase, and failed to read the fine print on the Zadeh Kicks website,
REFUNDS/CANCELLATIONS
All pre orders and items have a cancellation fee listed. Please see the item for specific percent of the cancellation fee.
If percent is not listed it is then 20%. Otherwise it can range from 15% to 40%. If you order a pre order please be positive and willing to wait for item to release.
You cannot request an order cancellation within one week of official release. There will always be a cancellation fee if you request to cancel the order except for only one scenario (outlined below). See below for details. — Zadeh Kicks
You would wonder how did Zadeh Kicks' policies remain unnoticed by Shopify?
The e-commerce platform that hosted Zadeh Kicks and while it hosts millions of sites, Zadeh Kicks belongs to the top 1% of Shopify stores, the volume of transactions ran into millions, and yet, its policies are at best described as very anti-consumer.
As listed in our store policies, there are NO returns on items
Again, store credit is now the only option in cases of cancelling a pre-order without the listed cancellation fee no matter the reason. That is unless the refund option is selected without future order ability.
All pre orders and items have a cancellation fee listed. Please see the item for specific percent of the cancellation fee. If percent is not listed it is then 20%. Otherwise, it can range from 15% to 40%.
And if you become a ‘noisy’ customer, and insist on cancellation or refund, then you and your household will be banned from making another order.
Ponzi scheme
Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money.
How do I get my money back from Zadeh Kicks? There is no guarantee that you will ever see your money back.
One can dispute the charges if you use your credit cards or PayPal. But if you used a debit card, you may have a harder time getting your money back.
Zadeh Kicks as a company is dissolved. Voluntary dissolution generally happens when the purpose of the LLC is completed or fails to be economically viable. Based on Zadeh’s Petition, Zadeh Kicks stated that its present liabilities exceed its present assets, aka Zadeh Kicks is insolvent.
So, economic viability seems to be the reasoning they are offering. — Excerpt, Zadeh Kicks shuts down Popular sneaker pre-ordering service
Have you been scammed? Sneakers arbitrage is a growing business, but like cryptocurrency trading, it is easy to lose all your money. The rise and rapid fall of Zadeh Kicks is a cautionary tale about a white-hot business that moves so fast it outpaces both regulators and consumer protection.
Zadeh Kicks was the darling of the sneakerheads/speculators, from zero sales to pre-order sales of over $100,000,000 in 2021.
Everyone believed Michael can deliver, but the truth was he didn’t have the sneakers, and all he had were empty boxes and empty promises.
He bullied anyone who complained, and all of that has been scrubbed off his social media accounts.
He never had any business relationships with the brands.
He developed ties with retailers through the years, and their motivation could be the same as what motivated Michael Malekzadeh to create what authorities are calling the biggest sneakers scam and that is money.
Final words
In 2015, Michael Malekzadeh lost all his shoe collection in a fire from which he was able to collect insurance money to the tune of $200,000 all because according to him a cat started the fire.
The sneaker arbitrage and its secondary market is a growing business. What is fueling the market is speculation.
Cowen Research declared sneakers an “alternative asset class” in 2019, projecting the sneaker resale market to reach $30 billion by 2030.
Cowen reported in a follow-up report released in 2021 that the sneaker resale market grew 100 percent in 2020, surpassing $2 billion in US sales, with the industry expected to grow 20 percent year over year for the rest of the decade. — Excerpt, Overhyped & Under-Regulated: Zadeh Kicks, the Sneaker Arbitrage that Cost Customers Millions
It is a real money maker. StockX and GOAT two of the more established sneaker resale platforms have a combined $7.5 billion in market valuation.
Think of NFT when you realized how much someone paid for Kanye West sneakers worn at the Grammy’s in 2008 for $1.8 million.
As we saw what happened in the cryptocurrency world, many wanted to have a piece of the pie even if they don't have the money to invest, they would take loans, invest the 401K or give all their saving to crypto evangelists only to lose not only their money but their sanity.
Many of us are collectors some collect things like the one I’m dating.
When I first walked into his house, I saw boxes upon boxes of rubber shoes and sneakers, mostly white and of the same design. It was his thing, to collect.
He is also a toy collector. Maybe someday he would sell them for a profit.
While I take pity on those who lost their money, especially those who saved up to buy the sneakers they always dreamed of wearing.
I have less sympathy for speculators, those who want easy money, and those who will flaunt their money on social media.
They are the ones who feel they are living everyone’s dream. To make money with very little effort is what YOLO means — You only live once!
And yet they are also the first ones to call themselves victims once the reality had set in that all of their money comes from a Ponzi scheme.
They are as much part of the problem, their greed got the better of them from head to foot.
Thank you for reading.
Sources:
Sneakerhead Accused of Running Huge Air Jordan Ponzi Scheme
Overhyped & Under-Regulated: Zadeh Kicks, the Sneaker Arbitrage that Cost Customers Millions
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