How the Air Jordan XI Low brought down basketball player Bernard Madoff
For a time, Michael Malekzadeh was a wealthy young man. Very rich: As Bloomberg explains in an article dedicated to this amazing Bernard Madoff of the sneaker, his little company Zadeh Kicks was able to pocket tens of millions of dollars spent at Lamborghini, Ferrari or Bentley, with the boy also slamming 3 million dollars at Louis Vuitton or goldsmiths and similar delicacies.
Originally from Eugene, Oregon, Malekzadeh was the sport and collector pump wizard. For years, his small shop has been selling rare pairs at bargain prices that consumers vie for.
Since the name Bernard Madoff was mentioned, the sequel has been known: Zadeh Kicks is now described as a long-running Ponzi scheme, the massive orders of one funded the big discounts on the shoes of the other, until the whole thing no longer crumbles like a house of cards.
In the sneaker market, valued at $70 billion in 2020, Zadeh Kicks had carved out a nice spot and found a large clientele who were happy to get their hands on rarities at such low prices.
“In reality, Prosecutors are now declaring Malekzadeh took orders and raised the money for thousands of sneakers he didn’t have and couldn’t have, at least at commercially interesting prices.writes Bloomberg.
In short, as always in these eye-catching charts, it was way too good to be true. Some customers ordered hundreds of pairs of these rare pumps and then resold them in the market at high prices. It happened regularly that they received all or part of their order, and the first ones could sometimes do great somersaults.
Others, however, victims of the pyramid received nothing or only part of their order. They were then persuaded with gift certificates, delaying maneuvers and promises of tomorrow singing.
The building shook but did not collapse. Until the latest iteration of Nike’s Air Jordan, the XI Low Cool Grey, announced by Nike in December 2021 at a public price of $225. A few weeks before the launch, the Zadeh Kicks website offered the shoes for just $115, with delivery a few weeks after the launch.
“Malekzadeh sold 600,000 pairs, he had 6,000”, says Bloomberg. But while Zadeh Kicks collected up to $70 million, the mass of defrauded customers caused the system to collapse, leaving Malekzadeh in a very precarious position. Unable to fulfill paid orders, the company disappeared.
She would still have 60,000 pairs of pumps of different brands and models in a closed warehouse in Oregon, in front of which angry customers sometimes gather to pay her bill – the police had to intervene several times, and a shot of interference was fired.
Zadeh Kicks could count on some angry ones sneaker heads. Bloomberg is introducing the case of Jeremy Rogers, a Texas researcher who commissioned the site “100 pairs Air Jordan 11 Cool Grey, 300 pairs Air Jordan 4 Retro Lightning, 225 pairs Jordan 4 Retro Military Black, 100 pairs Jordan 4 Retro Shimmer, 20 pairs Travis Scott Jordan 1 High Fragment”. A total of $143,000 was spent across fifteen different credit cards.
He thought he could then turn those sneakers into fortune, but really only got a portion of it. Bought for $160, his 100 pairs of Jordan Shimmers found buyers for $360: that single sale netted him more than $15,000.
Ultimately, this is not enough to cover his total losses. But this type of transaction represents a speculation whose financial potential is juicy enough that buyers are rushing in, also looking to cash in en masse on Zadeh Kicks record prices and the frenzy of collectible soft-soled shoes.
The most surprising thing, Bloomberg points out, remains that Zadeh Kicks was able to operate for so long without ever investing in low-level fakes: those lucky enough to have their orders fulfilled were given real sneakers made with had a high resale value.
Some suggest that he bought a large proportion of the pairs and then resold them on StockX, others that over time he has built up a large network of independent resellers who could potentially supply him with rare pairs.