What Happened to Zadeh Kicks?
There are few sneaker stories with more victims than this one. Have you ever heard of Zadeh Kicks?
Unless you've been out of the loop for a while, it's hard to read any sneaker news without mention of the meteoric rise and subsequent free fall of this sneaker reselling tycoon.
So what really happened to Zadeh Kicks, how did he build such an elaborate sneaker ponzi scheme, and who was affected because of it? Let's take a deep dive into the story behind one of the biggest sneaker scams ever.
What is Zadeh Kicks?
Zadeh Kicks was founded by Michael Malekzadeh in 2013 as a sneaker resale business that allowed budding sneaker resellers and flippers to preorder hyped shoes before they hit the retail shelves. Malekzadeh had built connections with retailers over the years and had developed a system to get shoes early.
If you're familiar with the sneaker resale business at all, you can understand why this would make Malekzadeh extremely powerful and profitable. If Zadeh Kicks could get shoes early, his customers could guarantee that they could obtain stock of hyped sneakers. Then, they could turn around and sell them to their customers at a profit.
Are you starting to see the ponzi scheme aspect behind whole business venture?
As Zadeh Kicks grew in prowess and credibility amongst the sneaker community, so did Malekzadeh's debt. Despite millions of dollars flowing into the business in the form of sneaker preorders, Malekzadeh's lavish lifestyle and shady business practices started to catch up to him.
A World of Fraud
By now, you've probably started to put two and two together. As the demand for sneaker preorders continued to grow, Zadeh Kicks struggled to find enough stock to satisfy customers. The problem? Malekzadeh was selling much more than he could obtain. A lot more.
At first Malekzadeh came up with a clever work around...he would offer to buy back the preorders from his customer's and offer them store credit instead. This way he could keep the money in the business without tipping of his customer's of the eminent collapse of the business.
But as Zadeh Kicks began to dwindle, customers became ansty, and angry. At one point Malekzadeh offered preorders on the upcoming Jordan 11 Cool Grey at around $125 a pair, around $100 less than the anticipated retail price.
Customer's jumped on the deal, to the tune of 600,000 pairs...nearly 70 million of dollars. Can you guess how many of these preorders Zadeh Kicks was able to fulfill? Only 6,000...just 1 percent of those customers received their order.
To make matters worse, Malekzadeh also committed fraud against multiple banks and lenders in order to keep up appearances and to try and keep the business afloat.
All in all, Zadeh Kicks' owner Michael Malekzadeh is being charged with defrauding customers to the tune of 70 million dollars, and committing fraud against lenders and banks for 15 million dollars.
In efforts to recoup some of the $85 million owed to customers and lenders, nearly 60k pairs of shoes found in Malekzadeh's warehouse will be sold. Officials estimate the collection's value to be a mere $15-20 million, a far cry from the $85 million that Malekzadeh took from those who trusted him.
From the outside looking in, it's easy to see the collapse of Malekzadeh's entire life and feel sorry for him...but those we should really empathize with are the droves of people who trusted Malekzadeh with their livelihood.
The Zadeh Kicks net was cast far and wide....from the brand new resellers with a few hundred dollars in capital to those buying millions of dollars of stock, each and every customer lost money and more due to Zadeh Kicks unfulfilled promises.
For these individuals, they may never recoup what was lost because of Zadeh Kicks. And that's really the tragedy of it all. Through the epic rise and catastrophic fall of Zadeh Kicks, the ones who end up hurting the most are those that trusted Michael Malekzadeh to follow through on his word.