Nike Claims ‘Sneakerheads’ Duped It

PORTLAND, Ore. (CN) - Nike claims in court that five former employees duped it into providing collectible sneakers that the "sneakerheads" sold for "hundreds of thousands of dollars" on the black market.

Nike sued Tung Wing Ho, Kyle Keoki Yamaguchi and Denise Wei-Ching Yee, along with Yamaguchi's spouse, Shu-Chu Yamaguchi, and Jason M. Keating, in Federal Court.

The shoemaker claims its employees abused their positions by ordering promo and sample shoes and keeping them or reselling them instead of using them for their intended promotional purposes.

Nike claims that its promos and samples are rare indeed and sought after by collectors - known as "sneakerheads" - and that the shoes "can command prices in the range of $1,000 to $10,000 or more in the collector market."

Nike says its promo products are "created for promotional purposes and ... are usually specifically manufactured for an athlete, team, celebrity or influencer."

Nike samples "are samples or prototypes of lines of shoes that are in development and have not yet been and may never be produced as retail products. Sample footwear may also be provided to an athlete, team, celebrity or influencer for promotional purposes prior to the release of the retail version of the footwear," the complaint states.

According to Nike, defendant Keating, of Florida, is a sneakerhead known as "Artaphax", and that from 2006 to 2012 he conspired with Ho, Yamaguchi and Yee to purchase the stolen sneakers.

Nike claims that "Keating paid Yamaguchi for the stolen footwear by means of in-person cash transactions or wire transfers to Yamaguchi's bank account. The payments to Yamaguchi for stolen footwear typically ranged from $5,000 to $30,000."

Nike estimates that Yamaguchi alone "netted ... considerable profits, at least in the hundreds of thousands of dollars."

It seeks compensatory and punitive damages for trademark infringement, conversion, fraud, breach of fiduciary duty and breach of contract, and an injunction preventing any more illicit sales of the company's shoes.

Nike is represented by Robert Weaver Jr. of Garvey, Schubert and Barer.

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