Were you or someone you know a victim of the Zadeh Kicks Ponzi scheme? You may be entitled to monetary compensation. As the sneaker retailer’s founder, Michael Malekzadeh, continues to pay his legal dues for cheating customers out of millions of dollars, authorities are putting his inventory up for sale.
Michael Malekzadeh was officially accused of a Ponzi scheme that swiped customers of more than $70 million dollars worth of sneakers. Federal prosecutors charged Malekzadeh with stealing the money, as well as falsifying $15 million worth of bank loan applications with his girlfriend as an accomplice. He was also charged with wire fraud, conspiracy to commit bank fraud, and money laundering.
Prosecutors are helping cheated customers get their shoes one way or another, as Malekzadeh’s nearly 60,000 sneaker inventory is going up for sale. That includes 1,100 pairs from Malekzadeh’s personal collection, consisting of old and new kicks which will be first to go. The inventory found in the Zadeh warehouse ranges from Nikes to Yeezys to Adidas kicks — totaling a grand sum of 59,780 pairs — that were claimed to be purchased from independent retailers or StockX.
The ugly side of the sneaker industry — However, as with most sneaker reselling these days, the sale won’t be easy. With Malekzadeh’s moral compass not exactly pointing due north, it’s unclear whether all the shoes in his warehouse are even authentic. The underbelly of the sneaker industry is vibrating with counterfeit products that not even sneaker “professionals” can spot. Jared Goldstein, author of Sneakerlaw, a book about the sneaker industry, told Bloomberg that he predicts most of the shoes’ value will be undermined, leaving a gap in their profit.
Due to the vastness of the debt, those who will be handling the sale, and the trickiness of the resale market, it’ll likely take months for customers to be rightfully compensated. And by the time the sneakers make it to the hands of their buyers, their value may not break even, leaving customers with no choice but to take a loss.
The rise and fall of Zadeh Kicks — Unfortunately, Malekzadeh was a notorious backdoor salesman, referring to a common practice where a select and privileged few get access to sneakers before the general public. According to the prosecutors, he made most of his profit by opening pre-orders for coveted kicks that he didn’t actually stock. About $70 million was made from 600,000 pre-sales of the Air Jordan 11 Cool Grey alone. Because Zadeh only had an inventory of 6,000 pairs, those who missed out were given worthless company gift cards, a practice adopted by the company as its debt accrued.
Since its start in 2013, Zadeh Kicks achieved gold status as one of the most trusted online sneaker retailers. Its inventory of coveted sneakers and holy grails quickly helped garner its loyal fanbase. In 2021, it recorded over 84,500 pre-order sales estimated at more than $100,000,000, Nice Kicks reported.
Zadeh Kicks profited on the sneaker hype of the past few years by promising customers sneakers months ahead of time, without actually proving it could even secure the shoe. By May of 2022, the operation was dissolved completely, leaving thousands of customers in the dark.
David Stapleton, the receiver of what’s left of the company, said that one of the options is to sell the shoes in bulk. Another is to disperse them across resale platforms, but Malekzadeh’s personal collection will be used as a test run. An official day for the sale is yet to be disclosed.