Nearly 60,000 Sneakers Put On Clearance Sale After $85 Million Ponzi Scheme Uncovered In US

48,339 pairs of Nike, 4,626 of Adidas, 4,746 of Yeezy,110 of Vans, 72 of Asics, 66 of New Balance, 59 of Converse, 23 of Puma, 16 of Reebok and 1,723 miscellaneous sneakers are on clearance sale in a warehouse in USA. The reason? The unearthing of a $85 million ponzi scheme.

In all, a neatly boxed 59,780 pairs of shoes are available for clearance sale in the sneaker store Zadeh Kicks¡¯ warehouse in Eugene, Oregon (USA).

It's been nearly a month after US federal prosecutors accused Michael Malekzadeh, the former owner and chief financial officer of Zadeh Kicks, of orchestrating a multi million-dollar Ponzi scheme involving coveted sneakers, a court-appointed receiver is looking to unload the nearly 60,000 shoes from the warehouse.

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As per Bloomberg report, the goal is to sell as many of the sneakers as possible, as soon as possible, in order to reimburse thousands of customers who authorities say ordered shoes but never got them. Experts also caution that even if all the sneakers sell, the amount raised wouldn¡¯t go anywhere near covering what the victims are owed. Customers might not get their money back for months, if ever.

Charges Against The Accused

According to court documents, 39 year old Malekzadeh started his business in 2013 by purchasing limited edition and collectible sneakers to resell online. Beginning as early as January 2020, Zadeh Kicks began offering pre-orders of sneakers before their public release dates, allowing Malekzadeh to collect money upfront before fulfilling orders. Malekzadeh advertised, sold, and collected payments from customers for pre-orders knowing he could not satisfy all orders placed, the US Department of Justice¡¯s press release mentioned this month.

US Federal prosecutors have charged Malekzadeh of cheating customers for more than $70 million and falsifying loan applications for more than $15 million in bank financing. Earlier this month, the accused had pleaded not guilty to charges of wire fraud, conspiracy to commit bank fraud, and money laundering. In May 2022, he dissolved Zadeh Kicks, as per Bloomberg report.

From his warehouse in Eugene, Oregon, Malekzadeh offered to sell limited-edition Air Jordans and other brands at below-market prices before manufacturers released them. Prosecutors say he took orders, and collected money for thousands of sneakers he didn¡¯t have and couldn¡¯t get, at least for prices that made any sort of economic sense, the report mentioned.

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Cash & Luxury Goods Worth Millions Seized

As part of the government¡¯s ongoing criminal investigation, US federal agents have seized millions of dollars in cash and luxury goods that Malekzadeh acquired with the proceeds of his fraud. The seized items include nearly 100 watches, some valued at over $400,000, jewelry, and hundreds of luxury handbags. And that¡¯s not all. The government also seized nearly $6.4 million in cash which was the result Malekzadeh¡¯s sale of watches and luxury cars manufactured by Bentley, Ferrari, Lamborghini, Porsche, and others.

Also, court documents list more than 15,000 creditors over 197 pages, ranging from individuals to financial firms including PayPal Holdings Inc., American Express Co. and Chase Bank. It remains to be seen whether the financial institutions involved will receive their money back first.

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