United States: arrest of the “Bernard Madoff of the sneaker”

In 2013, in Oregon, USA, Michael Malekzadeh started his sneaker resale business called Zadeh Kicks LLC. Problem: the American had attractive prices even before the manufacturers marketed the product. A well-crafted scam which claimed thousands of victims and which is echoed by BFM TV, Sunday August 14.

The 39-year-old man is now suspected of having set up a Ponzi scheme which would have allowed him to pocket millions of dollars. Nicknamed the “Bernard Madoff of basketball”, he is accused of defrauding thousands of people. He must now be accountable to the American courts, which accuses him of electronic fraud, conspiracy to commit bank fraud and money laundering. Michael Malekzadeh faces up to 30 years in prison.

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$6.1 million in cash seized

According to prosecutors, the 30-year-old was taking pre-orders and cashing in the money “for thousands of sneakers he didn’t have and couldn’t get, at least at commercially attractive prices,” says Bloomberg. Some buyers, who ordered up to a hundred sneakers, however received the famous shoes and were able to make a profit by reselling them online. Others, on the other hand, were not so lucky and lost thousands of dollars. To the latter, Michael Malekzadeh offered gift cards as compensation in order to guarantee his cash flow.

After years of fraud, this system was able to be dismantled, thanks to a pair of limited edition Air Jordan, the 11 Cool Gray, report our colleagues. Sold by Nike at 225 dollars, Zadeh Kicks LLC offered it at 115 dollars, even before its release last December. Result: Michael Malekzadeh sold a total of 600,000 pairs and pocketed 70 million dollars. However, the retailer actually only had 6,000 pairs. Since then, the scammer has been the subject of a judicial investigation. The FBI seized $6.1 million in cash from his home along with watches and about 1,000 pairs of sneakers from his personal collection. Michael Malekzadeh is also said to have spent a large part of his profits to buy luxury cars, jewelry and accessories.

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Still 60,000 pairs of sneakers in its warehouse

60,000 pairs of sneakers are still in its warehouse and the sale of these is one of the options on the table to reimburse some of the scammed customers. According to his attorney, the dealer “voluntarily turned over Zadeh Kicks and all his assets to an escrow and provided millions of dollars of his personal assets – including cash and hundreds of valuables – to the federal government” .

“He did so knowing that these assets would be used to ensure that parties who suffered financial harm” would obtain as “fair and equitable” relief as possible. How Michael Malekzadeh sourced so many rare pairs remains a mystery to experts. Last week, the young man pleaded not guilty to the charges against him. His fiancée is also being sued as the company’s financial director. The trial is due to begin in June 2023.

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