Court-Appointed Clearance Sale of 60,000 Sneakers in $85 Million Ponzi Scheme
Zadeh Kicks allegedly pocketed $70 million from Air Jordan 11 pre-sales.
With the global sneaker resale market poised to reach $30 billion by 2030 according to market analysis by Cowen Equity Research, it's no wonder pioneering entrepreneurs are finding legally creative ways to arbitrage the sneaker sales system. Federal prosecutors have accused Zadeh Kicks owner, Michael Malekzadeh, of masterminding a multi-million dollar Ponzi Scheme which lured in thousands of orders from hopeful sneakerheads. In order to reimburse the fraud victims, thousands of seized sneakers will be resold, including 48,339 pairs of Nikes, 4,746 Yeezys, and 4,626 adidas.
In this Bernie Madoff-esque scheme, the store allegedly pocketed about $70 million USD from just the pre-sales of roughly 60,000 Air Jordan 11 Cool Greys alone. Reportedly, Malekzadeh was only able to acquire about 6,000 pairs, resulting in customers receiving a combination of cash refunds and Zadeh Kicks gift cards — some orders were left unfulfilled. The store is also accused of falsifying loan applications for upwards of $15 million.
While sneakers from Malekzadeh’s personal collection will also be sold off, the $20 million in funds expected from these sales as well as the inventory from Zadeh Kicks’ warehouse will only cover a fraction of the estimated $85 million that is owed to the more than 15,000 creditors — including private individuals and mega financial institutions like AMEX and PayPal.
Zadeh Kicks, LLC was launched in 2013 and reports claim the site achieved $2 million in sales by 2015, then $6 million in monthly sales in 2017, until the company eventually ranked in the top 1% of Shopify Merchants in 2020. Purportedly, in 2021, Zadeh Kicks hit 84,500 sales with estimated pre-orders worth more than $100 million.
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