60,000 Nikes, Yeezys and Adidas sneakers for sale after $120 million Ponzi scheme collapses

“It’s going to take a lot of work for them,” said Yu-Ming Wu, founder of Sneaker News.

Federal prosecutors charged Malekzadeh, 39, with defrauding clients of more than $70 million ($100 million) and forging loan applications for more than $15 million in bank financing. Earlier this month, Malekzadeh pleaded not guilty to charges of wire fraud, conspiracy to commit bank fraud and money laundering. In May, he dissolved Zadeh Kicks, which he had run since 2013.

‘Testing the market’

Representatives for his company did not respond to requests for comment on the sale. Nearly all of the inventory inside the warehouse has been accounted for, court documents show, and preliminary discussions with potential buyers or consumer resale platforms have already begun. The date of the sale has not yet been determined.

The trustee, David Stapleton, is trying to figure out how to unload the inventory. One possibility is to sell the shoes wholesale. Another is to download them through various resale platforms, according to court documents. Selling Malekzadeh’s personal collection first is aimed at “testing the market.”

The supposed sneaker prank seems tailor-made for these days of meme madness. From his warehouse in Eugene, Oregon, Malekzadeh offered to sell limited-edition Air Jordans and other brands at below-market prices before manufacturers released them. Prosecutors say he took orders, and raised money, for thousands of sneakers he didn’t have and couldn’t get, at least at prices that made some economic sense.

Zadeh Kicks pocketed $70 million from presales of a single Air Jordan model, the 11 Cool Grey, prosecutors say. The total amount of money owed from all presales has yet to be determined.

Your warehouse is now guarded by a security officer. Experts say the cache, still boxed and tagged, could be worth between $12 million and $20 million, at best.

Jared Goldstein, author of sneakers, a book on the sneaker industry, said some of the shoes could be worth thousands on the resale market, but estimated most will average $200 to $300. The real test for the receiver will be how well he can price these sneakers on the market if they are sold in bulk, Goldstein said, arguing that even $20 of 60,000 pairs can add up to millions of dollars.

“I’m sure these people who are running it are not that smart when it comes to sneakers,” Goldstein said.

The court documents list more than 15,000 creditors on 197 pages, ranging from individuals to financial firms, including PayPal, American Express and Chase Bank. It is unclear whether the financial institutions involved will receive their money first.

One challenge is making sure all shoes are authentic. Another is the vagaries of the sneaker resale market, which exploded during the pandemic alongside cryptocurrencies and stonks. Like the stock market, sneaker prices have plummeted this year.

“The market is trending down across the board,” said Matt Halhill, founder of Nice Kicks, a sneaker blog. “There is no way it will even come close to covering the victims.”

Bloomberg Wealth

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