Online sneaker store Zadeh Kicks was once the go-to platform for sneaker resale, specialised in limited edition and hard-to-get styles. But for years owner Michael Malekzadeh was running an apparent Ponzi scheme, and last year recorded over 84,500 pre-orders valued at 100,000,000 dollars. Many customers are yet to receive their orders or be refunded.
Despite selling highly sought after limited edition sneaker runs from brands including Nike, Yeezy and Jordan, Mr Malekzadeh was not directly supplied by brands, instead relying on third parties and retailers to purchase sneakers in order to re-sell them with a margin on his own platform.
“By developing relationships with the stores he purchased from, Malekzadeh was eventually able to secure newly released products, including retro Jordans, in a manner commonly referred to in the business as a “backdoor” arrangement,” said Nice Kicks.
A pre-sale of Air Jordan fetched 70,000,000 dollars
The company stands accused of stealing 85 million dollars out of customers and financial institutions. A pre-sale of limited edition Air Jordans reportedly took in nearly 70,000,000 dollars. Over 15,000 of potential customers, collectors and financiers are left out of pocket, which the company’s current inventory of 59,780 sneakers is not sufficient to settle all the debts.
According to Bloomberg, court documents revealed Zadeh Kicks LLC has 59,780 pairs of sneakers of inventory, including 48,000 pairs of Nike, 5,000 pairs of Yeezy and adidas sneakers and 2,000 pairs of various brands such as Vans and New Balance. A court-appointed receiver will decide how the stock will be divided and credited.
The majority of debt is owed to customers who pre-ordered in bulk for a discounted price when compared to the sneaker market. The court documents also stated 1,100 used and unused sneakers from Malekzadeh’s personal collection will be sold first.
Mr Malekzadeh is by some being referred to as the Bernie Madoff of sneaker resale. Desolving his company in May this year, Mr Malekzadeh pleads not guilty to charges of money laundering, wire fraud, and conspiracy to commit bank fraud.