Zadeh Kicks Reseller Criminal Charges: Wire Fraud, Money Laundering
Written by SOURCE on July 30, 2022
Michael Malekzadeh, the infamous reseller who shut down his Oregon-based sneaker business this year and left customers with millions of dollars in outstanding orders, has been charged with wire fraud, conspiracy to commit bank fraud, and money laundering.
A filing submitted in Oregon district court Friday accuses Malekzadeh of raking in millions of dollars off sneaker preorders he couldn’t fulfill and then spending the money on high-end cars, designer bags, and “millions of dollars in watches.” His partner Bethany Mockerman, the CFO of the reselling business, is also being charged.
Malekzadeh, better known online as Zadeh Kicks, is accused of defrauding customers through a scheme of selling preorders for coveted shoes that he wasn’t able to fulfill. “Malekzadeh did not have the ability to purchase the sneakers for less than the price at which he presold the sneakers,” the filing from Friday reads. “Instead, he purchased sneakers from other third-party vendors for at or above retail price.”
The Zadeh Kicks story went viral when news of him dissolving his business first arrived in May. Since then, hundreds of customers have emerged with horror stories about the money they’d spent on preorders that were never fulfilled. One Zadeh Kicks buyer told Complex they had $500,000 tied up in outstanding orders.
A court document detailing the criminal charges brought against Malekzadeh describes how he would offer to “buy back” customer orders that he couldn’t fulfill, covering the differences with cash and gift cards. Malekzadeh allegedly accepted preorders for over 600,000 pairs of the “Cool Grey” Air Jordan 11 in 2021, bringing in $70 million for his business. He only acquired just over 6,000 pairs of the shoes, per the filing.
The description of the wire fraud count brought against Malekzadeh says that on Jan. 10, 2022, he attempted to to transfer $2.4 million from a PayPal account to the bank account of Zadeh Kicks LLC.
“Mr. Malekzadeh is not hiding from his conduct,” his lawyers said in a statement to Complex. “He has consistently taken full responsibility for his actions and will continue to do so. 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.”
In their statement, his lawyers underlined that Malekzadeh turned over the assets of his business to the receiver and turned over millions of dollars worth of personal assets to the federal government.
“He did so with the understanding that those assets would go toward making the parties who have suffered financial harm as whole as possible in a fair and equitable way and to protect those parties from any single creditor ‘jumping the line’ to receive an unfair share,” the lawyers said. “Mr. Malekzadeh will continue to work with the government to provide his remaining personal assets for that same purpose.”
Prosecutors say Malekzadeh and his partner Mockerman provided false information, including altered bank statements, while applying for loans for Zadeh Kicks. “In total, defendants submitted over 15 fraudulent loan applications, all of which contained false and altered financial information,” the court document says. “Defendants received well over $15 million in loan funds from these applications.”
In the count of money laundering, prosecutors allege that Malekzadeh moved $790,000 from his business bank account to his personal account on June 7, 2021, to buy a $420,000 watch and a $79,000 car.
If convicted, both defendants will be made to forfeit any property connected to their alleged crimes.
Malekzadeh is also the subject of a civil lawsuit filed by American Express last week that seeks monetary damages in excess of $2 million. In that lawsuit, he’s accused of fraud and breaching his contract with the credit card company.
