Oregon Sneaker Scam Duo Plead Guilty to $80 Million Fraud Involving Fake Preorders and Bank Loans

Two Eugene residents, Michael Malekzadeh, 42, the owner of the now-defunct Zadeh Kicks, and  Bethany Mockerman, 42, its Financial Officer, pleaded guilty to criminal charges on Thursday relating to the Zadeh Kicks fraud scheme.

The scheme cost customers over $65 million in unfulfilled orders. Zadeh also defrauded financial institutions out of over $15 million.

Zadeh Kicks Fraud Scheme In Eugene Court

Zadeh Kicks LLC sold limited edition and collectible sneakers online. Court documents indicate that Malekzadeh started the sneakers business in 2013.

He bought limited edition and collectible sneakers to resell online. From January 2020, the company offered preorders of sneakers before their public release dates, and Malekzadeh collected money upfront before fulfilling orders.

He advertised and sold sneakers before collecting payments from customers for preorders, despite knowing he could not satisfy all orders placed. Over $65 million was owed to customers for undelivered sneakers by April 2022.

As CFO at Zadeh Kicks, Mockerman conspired with the owner to provide false and altered financial information to several financial institutions, including altered bank statements on over 15 bank loan applications. Following these applications, $15 million in loans were paid out.

On Thursday, Malekzadeh pleaded guilty to wire fraud and conspiracy to commit bank fraud, while  Mockerman pleaded guilty to conspiracy to commit bank fraud.

During the investigation, which involved the FBI, IRS Criminal Investigation, Homeland Security Investigations, and the Oregon Intellectual Property Task Force, millions of dollars in cash with luxury goods that Malekzadeh acquired with the proceeds of his fraud were seized, including luxury watches, jewelry and hundreds of handbags.

Approximately $7.5 million was also seized from the sale of Malekzadeh’s residence in Eugene, his watches, and Bentley, Ferrari, Lamborghini, and Porsche luxury cars luxury cars.

Malekzadeh and Mockerman were charged on July 29, 2022. The pair face:

• Malekzadeh: On the first charge- a maximum sentence of 20 years in prison, plus a $250,000 fine and three years of supervised release for wire fraud, and a maximum sentence of 30 years in prison, a $1,000,000 fine on the second charge of conspiracy to commit bank fraud.
• Mockerman: A maximum sentence of 30 years in prison plus a $1,000,000 fine and five years of supervised release.

A U.S. district judge will sentence them later this year—on August 12 and August 26, respectively.

In their plea agreements, Malekzadeh and Mockerman agreed to pay restitution in full to their victims and, if necessary, forfeit any criminally derived proceeds and property used to facilitate their crimes identified by the government before sentencing.