Zadeh Kicks Owner Sentenced to Prison in $65 Million Sneaker Fraud Scheme
The owner of Zadeh Kicks, once among America's largest sneaker resellers, has been sentenced to 70 months in federal prison for operating what federal prosecutors describe as a Ponzi scheme that defrauded customers of more than $65 million. Michael Malekzadeh, who pleaded guilty to wire fraud and conspiracy to commit bank fraud, will also face five years of supervised release and has agreed to pay full restitution to victims, with a hearing scheduled for March 31, 2026.
Background and Context
Founded in 2013, Zadeh Kicks built its reputation on a pre-order system that allowed customers to purchase unreleased sneakers at below-market prices. The business model, however, concealed a fundamental flaw: new pre-orders were used to fund the fulfillment of earlier ones, creating what prosecutors called a classic Ponzi scheme. By 2022, shipping delays mounted, and the online sneaker community began raising questions about the company's solvency. In May 2022, the company entered receivership, placing control under an external party to manage its remaining assets and address outstanding debts.
Key Figures and Entities
Michael Malekzadeh, the founder and operator of Zadeh Kicks, admitted to using fraudulent financial statements to secure more than $15 million in bank loans across more than 15 applications. According to court documents reviewed during the investigation, Malekzadeh also falsified bank statements and provided altered financial information to numerous financial institutions. Federal authorities seized approximately $7.5 million in personal assets, including luxury vehicles from Ferrari, Lamborghini, and Porsche, along with watches, jewelry, and handbags. The U.S. Attorney's Office for the District of Oregon led the prosecution.
Legal and Financial Mechanisms
The scheme exploited the high-demand nature of limited-edition sneakers and the speculative market surrounding them. When the company collapsed, receivers discovered approximately 60,000 pairs of sneakers in inventory, valued between $12 million and $20 million—far short of the $65 million owed to customers. The receiver managed to sell about 37% of the inventory through an eBay account known as "pacific_kickz," with the remainder going to private buyers, consignment outlets, and independent retailers. The court proceedings revealed that Malekzadeh had also engaged in systematic bank fraud, submitting doctored financial documents to secure loans that kept the operation afloat.
International Implications and Policy Response
While centered in Oregon, the Zadeh Kicks case highlights vulnerabilities in online retail markets, particularly in high-value collector categories. The sentencing comes amid increasing scrutiny of similar business models in the resale industry. Federal prosecutors emphasized that the case illustrates how digital marketplaces can facilitate sophisticated financial crimes, requiring enhanced regulatory oversight. The Department of Justice has used this conviction to demonstrate its commitment to pursuing financial fraud schemes regardless of their industry context.
Sources
This report draws on the U.S. Attorney's Office press release, court filings from the District of Oregon, and public records regarding the receivership proceedings. The investigation incorporated documents from federal court proceedings between 2022 and 2026, along with statements from the U.S. Attorney's Office and IRS Criminal Investigation.
