29 Apr Nike sues ex-employees, others in sales of allegedly stolen limited-edition sneakers
Nike has filed a federal lawsuit against five people, including three former employees, accused in the alleged theft and nationwide sales of limited-edition company sneakers.
The complaint filed in U.S. District Court in Portland on Monday claims that former employees Kyle K. Yamaguchi, Tung W. Ho and Denise W.C. Yee, as well as Yamaguchi’s wife, Shu-Chu Yamaguchi, and sneaker reseller Jason M. Keating, were involved in a scheme that stretched from 2006 to 2014.
The lawsuit lists trademark infringement, fraud, and breach of contract among the allegations. It seeks a jury trial and damages that include profits made from the unauthorized sneaker sales.
Nike claims it has been suffering “and continues to suffer damages” because of the alleged thefts and unapproved sales, the lawsuit said.
A receptionist at Portland-based law firm Garvey Schubert Barer, which is representing Nike in the case, said the firm is referring all questions about the lawsuit to the apparel company. Greg Rossiter, a Nike spokesman, confirmed Monday that the company is filing the lawsuit to recover losses from the unsanctioned footwear sales.
Only Keating, 35, of Sanibel, Florida, has been arrested in connection with the case and is accused of receipt of stolen property. Washington County and federal investigators say Keating was a frequent buyer of stolen promotional and sample Nike footwear.
Promotional and sample products consist of items usually made for an athlete, team, celebrity or other influencer and in some cases never become retail products.
These types of shoes are of high value for sneaker collectors, who buy, sell and trade footwear and advertise collections online and through social media. Federal investigators say the Nike promotional and sample sneakers could be sold for prices ranging from $1,000 to more than $20,000 among collectors.
Court documents say Keating would buy the sneakers from Kyle Yamaguchi for $5,000 to $30,000 or more and then sell the items to small businesses in Oregon, California, Florida, New York and New Jersey. The lawsuit claims Keating knew he was buying stolen Nike sneakers.
Keating, described in the lawsuit as a “high-end sneaker collector and reseller known in the online community of [sneaker collectors] as ‘Artaphax,'” has been released from federal custody. Keating’s attorney, Gerald Needham, told The Oregonian that his client plans to plead not guilty during a federal arraignment on May 15.
It was not immediately clear Monday if Kyle Yamaguchi, Shu-Chu Yamaguchi, Tung Ho and Denise Yee have legal representation.
According to the lawsuit, Kyle Yamaguchi worked as a Nike promotional product manager between 2006 and 2012, and then Ho replaced him until the company fired him in March in connection with the alleged sneaker thefts. The two were part of a limited group of employees able to directly order the promotional and sample footwear from authorized Nike manufactures.
Yamaguchi, 33, of Portland, kept the sneakers he ordered or sold them to other people, the lawsuit said. Once he left Nike, he bought sneakers ordered by Ho, 35, of Portland, and then resold them to Keating and other buyers for a percentage of the total sale.
Yamaguchi resigned from Nike in 2012 to start a sunglasses business called LOOK/SEE. Nike refers to sample shoes internally as Look See products.
Yamaguchi “handpicked” Ho to replace him as a promotional product manager when he left Nike and trained him, the lawsuit said.
Ho told investigators that he stole several hundred sneakers from Nike and made $15,000 selling them on eBay, court documents said. He claimed he would order the footwear from a Nike factory in China, have the items shipped to him and then would either sell them on eBay or to Yamaguchi. Authorities seized seized nearly 1,950 pairs of Nike sneakers and an undisclosed amount of cash from Ho’s home in March.
During an eight-month period between 2012 and 2013, a Chase Bank investigator found transfers and deposits of more than $221,000 between Keating’s account and Yamaguchi’s accounts. Yamaguchi wrote a total of $104,000 in checks to Ho over a four-month period between 2012 and 2013, court document said.
“Yamaguchi and Ho’s unlawful scheme to convert and sell Nike shoes without Nike’s authorization or knowledge was both outrageous and egregious,” the lawsuit said.
Yee, a former Nike demand planning analyst and Ho’s girlfriend, often helped Ho with moving the footwear, knew they were stolen and that they were being sold, the lawsuit said. Yee, 32, of Portland, had worked for six years in the company’s accounting division and was also fired in March, according to the lawsuit.
Shu-Chu Yamaguchi, 34, of Portland, is also suspected of knowing about the stolen Nike sneakers and aided by allowing the footwear to be kept in her home and business, the lawsuit said. The Yamaguchis founded 141 Eyewear, a prescription eyeglass company that regularly donated frames to children in need.
— Everton Bailey Jr.