The founder of sneaker reseller Zadeh Kicks was sentenced to almost six years in prison for a fraud conspiracy that led to the infamous collapse of the online platform and $80 million in losses for customers and financial institutions.
Bloomberg
Michael Malekzadeh, 42, was sentenced Tuesday in Eugene, Oregon, to 70 months behind bars and ordered to forfeit more than $15 million in assets, federal prosecutors said in a statement. Last year, Malekzadeh pleaded guilty to wire fraud and bank fraud.
The sentencing signaled the end of a case that sent shockwaves through the sneaker reselling market, which reached record highs during the 2020 pandemic. Malekzadeh rode this boom to improbable heights, offering sought-after shoes at competitive prices from his warehouse in Oregon, even before manufacturers released them.
A lawyer for Malekzadeh didn’t immediately respond to a request for comment.
According to the US Attorney’s Office in Oregon, Malekzadeh “advertised, sold, and collected payments from customers for preorders knowing he could not satisfy all orders placed.” All in all, he owed customers more than $65 million in unfulfilled orders and defrauded financial institutions out of $15 million they’d loaned him, court records show.
Malekzadeh used the money to fund a lavish lifestyle, prosecutors said. Agents seized luxury watches, jewelry and hundreds of handbags during the investigation, court documents show.
As part of their plea agreements, Malekzadeh and his partner, Bethany Mockerman, the company’s chief financial officer, agreed to pay restitution in full to their victims. The judge set a restitution hearing for March 31.
The government said it raised $7.5 million from selling Malekzadeh’s residence in Eugene, his watches and luxury cars manufactured by Bentley, Ferrari, Lamborghini and Porsche.
In a separate case, Zadeh Kicks, which Malekzadeh founded in 2013, and all of its sneakers were taken over by a court-appointed receiver, who’s been in charge of liquidating its assets.
The case is US v. Malekzadeh, 22-cr-262, US District Court, District of Oregon (Eugene).
