AMEX Sues Zadeh Kicks’ Owner + CFO – Alleges Fraud

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American Express National Bank has filed a lawsuit in federal court against Zadeh Kicks founder and owner Michael Malekzadeh and CFO Bethany Mockerman.

In the suit, AMEX is seeking more than $2 Million in unpaid balances spread across three cards used by the Zadeh Kicks business and Mockerman.

Plum Card CMA – $1,314,708.59
Business Gold Card CMA – $712,064.96
Blue Cash CMA – $3,000.00

Included in the complaint is some deeper insight into the Zadeh Kicks business which came about when Michael Malekzadeh requested a limit increase on his Plum and Gold cards in mid-to-late 2021 beyond the $1 Million limits citing business expansion, increased sales volume and the need to substantially ramp up purchases of inventory. Zadeh Kicks’ request for a material increase in its credit limit initiated American Express’s regular underwriting and credit review process.

Beginning in late February of 2022, American Express requested Malekzadeh and Mockerman supply financial information, tax returns and various other documentation in order to consider Zadeh Kicks’ requested credit limit increase. In this process, Malekzadeh and Mockerman provided Company Financial Statements for Zadeh Kicks and Personal Financial Statements for its sole-owner Michael Malekzadeh.

The Company Financial Statement disclosed Zadeh Kicks 2021 revenues exceeded $304.9 Million with a net income of $17.4 Million and had over $9.8 Million of cash-on-hand with a total net worth of $26.1 Million inclusive of assets and inventory. Malekzadeh disclosed his personal assets at more than $7.7 Million.

On March 28, 2022, American Express raised the aggregated limit from $1 Million to $2 Million. The following month, Zadeh Kicks stopped taking new orders and a few weeks later filed for dissolution.

The complaint includes three counts of breach of contract for unpaid balances, but the final two counts are more aggressive against Malekzadeh and Mockerman that include allegations of fraud and operating a Ponzi scheme with intent to defraud customers.

The complaint was filed last week and was assigned to Judge Ann L. Aiken in Oregon District Court.

CMECF-USDC-Oregon-CMECF-USDC-Oregon

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