Michael Malekzadeh, 42, the former owner of the now-defunct Oregon-based sneaker resale company Zadeh Kicks LLC, pleaded guilty on March 20 to wire fraud and conspiracy to commit bank fraud. According to the U.S. Attorney’s Office for the District of Oregon, Malekzadeh orchestrated a massive fraud scheme that defrauded customers of more than $65 million and financial institutions of more than $15 million.
Zadeh Kicks, founded in 2013 by Malekzadeh, initially gained popularity by buying and reselling limited edition and collectible sneakers online. However, in January 2020, the company shifted its business model to include preorders for unreleased sneakers, collecting payments in advance from customers without the ability to fulfill the orders.
By April 2022, Malekzadeh owed customers an astonishing $65 million in undelivered merchandise. Meanwhile, he falsified financial documents to secure more than $15 million in loans, misleading financial institutions.
Bethany Mockerman, 42, who served as the chief financial officer of Zadeh Kicks, conspired with Malekzadeh by providing false and altered financial records to lenders, according to the U.S. Attorney’s Office.
During the investigation, authorities seized millions of dollars in cash and luxury items purchased using the fraud proceeds. Among the seized items were watches, jewelry, handbags, and high-end vehicles, including Bentley, Ferrari, Lamborghini, and Porsche. Additionally, nearly $7.5 million was recovered from the sale of Malekzadeh’s home in Eugene, Oregon, as well as the luxury items.
Malekzadeh faces significant penalties, with the possibility of up to 20 years in prison, a $250,000 fine, and three years of supervised release for wire fraud. For the conspiracy to commit bank fraud charge, he could face up to 30 years in prison and a $1 million fine. He is scheduled to be sentenced on August 12.
Bethany Mockerman, who also pleaded guilty to conspiracy to commit bank fraud, will be sentenced on August 26.
This case serves as a stark reminder of the dangers of fraudulent schemes, especially in the world of online business, and highlights the severe consequences for those who engage in deceptive practices.
