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Michael Malekzadeh, the founder behind the infamous sneaker resale business Zadeh Kicks, has officially entered a guilty plea to federal charges of Wire Fraud and Conspiracy to Commit Bank Fraud, marking a significant development in one of the sneaker world’s most notorious cases. His partner and co-conspirator, Bethany Mockerman, entered a guilty plea of Conspiracy to Commit Bank Fraud.
Following the voluntary disolution of Zadeh Kicks, the two were indicted in 2022 on numerous charges that included Wire Fraud, Conspiracy to Commit Bank Fraud, and Money Laundering. Malekzadeh and Mockerman initially plead not guilty to all charges.
Malekzadeh’s plea, filed in the United States District Court for the District of Oregon, includes an admission of guilt to orchestrating a fraudulent scheme involving sneaker pre-orders, misleading customers about inventory, and manipulating financial institutions. These actions not only shook the sneaker resale market but left countless customers financially harmed and raised serious concerns within sneaker culture and beyond.
Filed today, Malekzadeh outlined in his guilty plea admission of a few details and timeline of how he committed the crimes associated with his guilty plea.
Malekzadeh did not have the ability to purchase the sneakers for less than the price atwhich he presold the sneakers. Instead, he purchased sneakers from other third-party vendors for at or above retail price.
By or near the Fall of 2020, Malekzadeh began advertising, selling, and collecting payments from victims for preorder sneakers knowing he could not satisfy all orders placed. For customers who did not receive the preordered sneakers, Malekzadeh offered a combination of refunds and gift cards. He offered to “buy back” the undelivered sneakers from customers at a premium, offering cash and gift cards in excess of the amounts paid by his customers for the sneakers. In some instances, Malekzadeh also delayed sending sneakers, sometimes for up to a year, and left numerous orders unfulfilled without providing a refund or gift card to customers.
By April 2022, Malekzadeh and Zadeh Kicks LLC owed customers over $65 million for undelivered sneakers.
To purchase sneakers and run operations at Zadeh Kicks LLC, Malekzadeh and his co- conspirator Bethany Mockerman applied for numerous loans at Financial Institutions. As part of those applications for loans, Malekzadeh and Mockerman provided altered and false financial information from Zadeh Kicks LLC. The false information included altered bank statements that removed reference to other loans Zadeh Kicks LLC received.
These false financial statements and altered bank records were provided to various banks and financial institutions for the purpose of influencing their decision to loan money to the business.
In total, Malekzadeh and Mockerman submitted over 15 fraudulent loan applications, all of which contained false and altered financial information. They received over $15 million in funds from these loan applications.
The US Attorney’s Office will recommend a 84-month prison sentence as long as Malekzadeh demonstrates acceptance of responsibility. He will seek a sentence as low as 54 months.
The US Attorney’s Office will recommend an 18-month prison sentence as long as Mockerman demonstrates acceptance of responsibility. She is free to seek a sentence of any amount of time.
Sentencing for both will happen at a later date.
As part of his guilty plea, Malekzadeh agreed to forfeit significant assets linked to the proceeds of his illegal activities. Notable items included in the forfeiture are:
- Over $7.7 million seized from various accounts at Oregon Community Credit Union, Selco Community Credit Union, and other monetary instruments.
- Luxury items including 80 high-end watches and 101 luxury handbags.
- Numerous pieces of fine jewelry, luxury sunglasses, and a highly coveted pair of Nike/Louis Vuitton sneakers.
- Cash proceeds from asset sales, including over $43,000 from the sale of a Lexus GX 460.
The plea agreement and asset forfeiture underscore the severity of Malekzadeh’s crimes and highlight ongoing risks and ethical concerns within the sneaker resale market.
The original investigative article by Nice Kicks, which detailed the rise and dramatic collapse of Zadeh Kicks, illuminated broader implications for the sneaker community, from accountability issues among resellers to the impact on everyday sneaker enthusiasts. Malekzadeh’s guilty plea brings some closure to the community but serves as a stark reminder of the potential for exploitation within the booming resale industry.
Stay tuned to NiceKicks.com for further updates on sentencing and the wider implications of this case for sneaker culture.
Lead photo by Todd Cooper of Eugene Weekly
UPDATE: Nice Kicks has received an statement exclusively from Michael Malekzadeh’s attorneys following his guilty plea.
