Huge Sneaker Reseller Hit With Fraud Charges!
So the Zadeh kicks story has been doing the rounds in the sneaker world as of late with every keen sneaker head glued to the screen wondering what will be the outcome of this now infamous scam. We all want to know what actually happened to Zadeh kicks.
Michael Malekzadeh (owner of Oregon based sneaker re-selling company 'Zadeh Kicks') has now been charged with wire fraud, conspiracy to commit bank fraud and money laundering. A filing submitted by the Oregon District Court accused Malekzadeh of raking in millions from sneaker pre-orders he couldn't fulfill, then reverted to spending the money on high end cars designer bags and watches. His partner Bethany Mockerman, the CFO of the reselling business, is also being charged.
Prosecutors detailed one egregious example of the kind of deals that got Malekzadeh in trouble. In Autumn of 2021, he began selling preorders for Nike Air Jordan 11 “Cool Greys.” He priced the shoes at $115-$120 a pair even though the retail price was expected to be in the range of $225 when the shoe was released in December of that year. The low price attracted thousands of customers who trusted the reselling giant to purchase these pre-orders. The bargain price attracted thousands. Prosecutors claim Malekzadeh received more than $70 million from orders for 600,000 pairs. Of the 600,000 orders placed only 6,000 of them were shipped, leaving 594,000 orders unfulfilled.
Reports of these unfulfilled order start all the way back in early 2020, but on may 19th 2022 zadeh kicks filed to voluntarily dissolve the company as well as allow the courts to take control, management and operation of his assets, as the rapid growth pf the company had rendered him unable to maintain the business.
The court heard that “Malekzadeh did not have the ability to purchase the sneakers for less than the price at which he pre-sold the sneakers,”, “Instead, he purchased sneakers from other third-party vendors for at or above retail price". Malekzadeh knew that continuing to do business in this way would be disastrous to his business so in an effort to control damage, he started offering a 'buy back' scheme for his customers offering credit and even gift cards for the unfulfilled orders, But as the amount of shoes unfulfilled started to stack up this became an impossible feat.
David Stapleton, the receiver now in charge of what’s left of the company, said several customers made “direct personal threats” against Malekzadeh, who went to court asking for help. Malekzadeh agreed to give up control of his company. He also agreed to cooperate with the FBI, court documents indicate. In a report issued earlier this week, the receiver said he found more than 60,000 pairs of athletic shoes in Zadeh Kicks’ warehouses and $6.1 million in a bank account.
Joanna Perini-Abbott, the Portland lawyer representing Malekzadeh, said he “is not hiding from his conduct.
“He has consistently taken full responsibility for his actions and will continue to do so,” Perini-Abbott said in a written statement. “He has cooperated fully with the federal government and the receiver from day one because his primary goal is to minimize the financial harm to his customers and other interested parties. "
Mockerman voiced similar sentiments. The criminal charges do “not alter Ms. Mockerman’s commitment to cooperating with the government in an effort to minimize financial harm to customers of Zadeh Kicks and other interested parties,” said her attorney Whitney Boise in a written statement.
We truly wish anyone that has money tied up with zadeh kicks the best of luck with getting their money back, But this case alone highlights the true vulnerability that the internet shows us and solidify's the importance of finding a seller you can trust with your money, Because if it looks too good to be true it often is. Be safe when buying your next sneakers,
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