For some time, Michael Malekzadeh was a wealthy young man. Very rich: as Bloomberg explains in an article dedicated to this amazing Bernard Madoff of the sneaker, his small company Zadeh Kicks was able to pocket tens of millions of dollars, spent at Lamborghini, Ferrari or Bentley, the boy having also slammed 3 millions of dollars at Louis Vuitton or goldsmithery and similar treats.
Originally from Eugene, Oregon, Malekzadeh was the sports and collectible pump magician. For years, his small business had been selling rare pairs at bargain prices, which consumers were scrambling to get.
Since the name of Bernard Madoff has been mentioned, the sequel is known: Zadeh Kicks is now described as a long-lasting Ponzi scheme, the massive orders of some financing the big discounts of the shoes of others, until the whole don’t crumble like a house of cards.
In the sneaker market, valued at 70 billion dollars in 2020, Zadeh Kicks had invented a nice place for himself and had found a large clientele, delighted to get their hands on rarities sold at such low prices.
“In reality, prosecutors now explain, Malekzadeh took orders and collected the money for thousands of sneakers that he did not have and could not have, at least at prices with any economic interest.writes Bloomberg.
In short, as always in these flashy diagrams, it was far too good to be true. Some customers ordered hundreds of pairs of these rare pumps, then resold them at high prices on the market. It happened regularly that they received all or part of their order, and the first ones were sometimes able to make big somersaults.
Others, on the other hand, victims of the pyramid, received nothing or only part of what they had ordered. They were then coaxed by gift certificates, delaying maneuvers and promises of tomorrows that sing.
The building was shaking but not yet collapsing. Until the latest edition of Nike’s Air Jordan, the XI Low Cool Grey, announced by Nike in December 2021 at a public price of $225. A few weeks before it went on sale, the Zadeh Kicks site offered the shoes at only $115, with delivery a few weeks after the launch.
Air money
“Malekzadeh sold 600,000 pairs, he had 6,000”, says Bloomberg. But while Zadeh Kicks collected up to 70 million dollars, the mass of betrayed customers ended up collapsing the scheme, and putting Malekzadeh in a very delicate position. Unable to honor orders that had been paid for, the company disappeared.
She would still have 60,000 pairs of pumps of various brands and models in a closed warehouse in Oregon, in front of which an angry clientele sometimes gathers to get their due – the police had to intervene several times and a shot was fired during one of these interventions.
Zadeh Kicks could count on a few furious sneakerheads. Bloomberg thus presents the case of Jeremy Rogers, a Texan researcher who ordered the site “100 pairs of Air Jordan 11 Cool Grey, 300 pairs of Air Jordan 4 Retro Lightning, 225 pairs of Jordan 4 Retro Military Black, 100 pairs of Jordan 4 Retro Shimmer, 20 pairs of Travis Scott Jordan 1 High Fragment”. In total, 143,000 dollars spent, spread over fifteen different credit cards.
He thought he could then turn these sneakers into fortunes, but really only received a part of them. Bought for 160 dollars, his 100 pairs of Jordan Shimmer found takers for 360 dollars: this single sale brought him more than 15,000.
This is ultimately insufficient to cover his total losses. But this kind of transaction represents speculation with the financial potential juicy enough for buyers to rush in, and also try to profit en masse from the record prices of Zadeh Kicks and the frenzy surrounding collectible soft-soled shoes.
The most surprising, underlines Bloomberg, remains that Zadeh Kicks was able to operate for so long without ever paying into low-level counterfeiting: those lucky enough to see their orders honored received genuine sneakers, endowed with a big value of resale.
Some suspect him of having bought a large part of the pairs then resold on StockX, others of having over time created a large network of fellow independent resellers, who could possibly supply him with rare pairs.
