Michael Malekzadeh pleaded not guilty Wednesday after being charged in a multimillion-dollar sneaker scheme last week, per Brendan Dunne of Complex.
Per Misyrlena Egkolfopoulou of Bloomberg, Malekzadeh was arraigned charges of wire fraud, conspiracy to commit bank fraud and money laundering.
"Mr. Malekzadeh is not hiding from his conduct," his attorney, Joanna Perini-Abbott, said. "He has consistently taken full responsibility for his actions and will continue to do so."
Federal authorities formally charged Malekzadeh last week. His business was named Zadeh Kicks LLC.
According to the feds, Malekzadeh's "fraud ran for years—and unraveled in months." The apparent undoing of his scheme came amid the COVID-19 pandemic when there was a spike in demand for sneakers.
In court documents obtained by Brendan Dunne of Complex, Malekzadeh allegedly accepted more than 600,000 preorders totaling $70 million for the "Cool Grey" Air Jordan 11 in 2021.
According to the filing, he only acquired 6,000 pairs of the shoes. The 39-year-old Oregon native would offer to "buy back" customer orders he was unable to fulfill and make up the difference with cash and gift cards.
Bethany Mockerman, Malekzadeh's fiancee and chief financial officer of Zadeh Kicks LLC, has also been charged in the scheme.
Egkolfopoulou noted the FBI has already seized "$6.1 million in cash from Malekzadeh, plus watches, as well as about 1,100 pairs of sneakers from his personal collection."
Prosecutors also say Malekzadeh falsified more than 15 loan applications for more than $15 million in bank financing.
Malekzadeh has been running the business for nearly a decade in a warehouse in Oregon. He offered to sell highly sought-after sneakers, particularly Jordans and Yeezys, for below-market prices before manufacturers released them to the public.
According to Egkolfopoulou, prosecutors said he was selling shoes "he didn't have and couldn't get, at least for prices that made any sort of economic sense."
The most serious of the charges brought against Malekzadeh, conspiracy to commit bank fraud, carries a maximum 30-year prison sentence if he is convicted.