Nike Swindled by Black Market Sneaker Scheme?

NikeNike, according to federal investigators, was swindled by a black market sneaker scheme that was being run out of their Oregon headquarters. The scheme, revealed by a federal investigation, involved the theft of thousands of pairs of pre-production Nike shoes called “Look See” models, that were sold around the United States for as much as $20,000 a pair.

The Look See Nike is a sample shoe used in the design process, with only a small amount ever making it to mass production. This is why they are so rare and valuable, especially to people who collect sneakers.

According to a probable cause affidavit filed in federal court, Jason Michael Keating, 35, of Sanibel, Florida, bought a shipment of the stolen shoes during a Portland meeting in March. Little did Keating know, the man he was meeting was working as a source for a federal agent and a Washington County Sheriff’s detective. Keating was arrested on Wednesday in Portland.

Keating had allegedly been working with Tung Ho, 35, Nike Basketball’s promo product manager and Kyle Yamaguchi, 33, of Portland. According to Nike security director Greg Fowler, Yamaguchi had previously held Ho’s manager position at Nike. According to a criminal complaint obtained by the Smoking Gun, Ho would order the sneakers directly from the company’s factory in China. Authorities say that Ho was aware of the supply and demand scheme, and then recruited Yamaguchi to sell the shoes that he would order. Federal authorities say Yamaguchi then turned to Keating, who would reportedly sell the shoes to different shops and boutiques around the country for big profits.

On March 14, Ho’s Portland home was raided by federal investigators, and according to reports, they found a large sum of money and almost 2000 pairs of Nike sneakers. Reportedly, despite receiving the Miranda warning when being taken into custody, Ho admitted to stealing the shoes and then selling them. Investigators say bank records revealed that Yamaguchi sent 13 checks totaling $104,000 to Ho.

Nike security officials discovered that the company was being swindled, and contacted detectives who began investigating the details of the black market sneaker scheme. Investigators saw surveillance videos of Ho leaving the Nike campus with the rare shoes. Authorities also saw surveillance of him unloading boxes that are believed to have had the sneakers in them, at a self-storage facility in Portland. According to court documents there are records of Look See orders that Yamaguchi and Ho made. According to reports, more evidence was uncovered by a Chase Bank Investigator, in the form of emails, cash deposits, and fund transfers that were made between the two men’s accounts at the bank. These transactions were made in multiple states and involved more that $221,000, said the probable cause affidavit.

Authorities spoke to Yamaguchi on March 20, and according to reports, he admitted to receiving 20 percent of the profits while serving as the middle man in the scheme. He also said that Keating was the biggest buyer of the stolen shoes, the affidavit said. According to court documents, Yamaguchi revealed some details of Keating’s actions, including the information that Keating would travel to Portland to make the larger purchases, while making many different withdrawals from several bank branches until he reached the amount that he needed. The amounts were believed to be between $5000 and $30000, but could be even more, the affidavit said.

Former Nike employees Yamaguchi and Ho are allegedly part of the black market sneaker scheme, and have reportedly taken thousands of dollars from the company by selling the stolen shoes. They have not yet been arrested, however, because the investigation is ongoing.

By Twanna Harps

Sources

USA Today 
The Oregonian
New York Daily News

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