The world’s first sneaker Ponzi scheme

Adam: [00:00:25] Hello and welcome to comedian versus economist. We demystify the world of money and help you get a handle on the bigger picture. My name's Adam and we're joined, as always, by my little older brother and real life economist Thomas. Hi, Thomas. 

Thomas: [00:00:37] Yeah. Gday, Adam. How you doing?

Adam: [00:00:40] Doing very well. Thank you. Daytime record today. So the sun's out, which is nice. Big show coming up. Let's get into it. Earning persistently low wages, Thomas has been linked with memory loss. I forget. Why could having rich friends make you wealthier? Yes. If you steal from them. But there may be other ways. And could we see the Nike Air Ponzi in stores any time soon? Not sure about that. We've got a story about a sneakerhead who really put his foot in it. But first, Thomas, Belgium, famous for chocolate, beer, waffles, and now inflation. Thomas Could we soon be enjoying Belgian style inflation here in Australia? 

Thomas: [00:01:23] Yeah, well, we covered off the wages last week. So far there's no no heat in the wages system in Australia. But Belgians are different story. Belgians. Belgium's copying it. Yeah, a bit of criticism over there because they've got an unusual wage setting system over there. So the both the public and private sector wages are indexed to inflation. So having private sector wages indexed to inflation is fairly common, but having private sector wages indexed to inflation is a bit unusual. 

Adam: [00:01:53] Then they don't they have a they have a choice in the matter. Like it seems like the private sector could just not do it if they didn't want to. 

Thomas: [00:01:59] Yeah, I don't think the industrial relations system is set up like that. Yeah. Something they brought it in in 1920 at the end of World War One. Yeah. And then private sector wages now just it's just standard, like an employment contract that it's indexed to inflation. Well, not quite. Inflation is indexed to the health index, which is CPI inflation, excluding alcohol, tobacco and petrol. Right. If the price of booze goes up, you don't get a pay rise, but it's the price of everything else goes up. [00:02:29][29.5]

Speaker 1: [00:02:31] The interesting. [00:02:31][0.2]

Adam: [00:02:32] Exclusions, alcohol and petrol, like petrol being a staple, alcohol arguably as well, especially in Belgium, Belgians love there'd be like a thousand different beers. [00:02:41][9.2]

Thomas: [00:02:41] Yeah, petrol is a bit of a funny exclusion I didn't quite understand. [00:02:44][2.8]

Adam: [00:02:44] Isn't that like, isn't petrol like the fundamental like one of the fundamental kind of measurements of inflation? Like the cost of petrol is going up? Then we're like, yeah, we're pretty sure we've got inflation in the, in the environment. I guess it could be just oil prices. Yeah, it'll. [00:02:59][14.2]

Thomas: [00:02:59] Pass through like it is petrol, you know, because it's such a fundamental component of production it'll pass through into the price of everything. So we don't know why that why they exclude an odd one. [00:03:10][11.2]

Adam: [00:03:10] So wages are indexed to the health index or inflation. So what's what's Belgian's inflation rate at the moment. You know. [00:03:18][7.9]

Thomas: [00:03:18] Well they're over 9% so like a lot, a lot of places CPI falling over 9%. [00:03:23][4.1]

Adam: [00:03:23] So that means that everyone's wages have also increased by 9%. [00:03:26][3.2]

Thomas: [00:03:28] They do it more on a quarterly basis. Yes, it's a different time so it's not quite like that. But the National Bank of Belgium is expecting like Pat on the back of this on the back of current inflation that wages will go up 12% over the next two years. Right. So that's a pretty that's a good wage increase. Anything you think about Australia's running a two and a half per cent a year, maybe we get 5% in two years. Hmm. Belgium, they're up at 12%, so yeah. Pumping along. [00:03:56][28.1]

Adam: [00:03:57] So is everyone there? Just like just cheering for the war? Just cheering for China. Lockdowns, that's. [00:04:03][5.7]

Speaker 1: [00:04:04] Yeah. [00:04:04][0.0]

Adam: [00:04:07] Like just generally barracking for inflation. [00:04:09][2.1]

Speaker 1: [00:04:10] Yeah. Yeah. [00:04:10][0.5]

Thomas: [00:04:11] Well, yeah. I don't know. [00:04:12][0.6]

Adam: [00:04:12] I guess it doesn't matter because of all the things they're buying are all kind of just. It's so even the evening out. [00:04:17][5.1]

Thomas: [00:04:17] Yeah, yeah, that's right. I mean, the World Health Organisation is looking into whether COVID originated in Belgium now. [00:04:23][5.9]

Speaker 1: [00:04:24] Doing it. Yeah, yeah, yeah. No, I mean. [00:04:30][6.1]

Thomas: [00:04:31] It's, it's right like it's 12%, it's a big wage increase but prices are going up 9% a year. So you're talking about wages. I mean by design what the indexation does is it makes sure that wages keep pace with inflation, which means that real wages aren't going backwards. Like we talked about this last week, like real wages in Australia are tanking, like it's means that your purchasing power is going backwards. Belgium has this unique situation in the entire world. I think Luxembourg also has has a system like this, but a unique situation in the world where wages keep pace with inflation, which means that purchasing power remains constant. And it's sort of like this weird thing. We're like, this is really unusual that what a weird way to structure your economy, that workers should be able to buy the same amount of stuff with the same amount of money. You know, everyone's. [00:05:18][47.1]

Adam: [00:05:18] Everyone's. [00:05:18][0.0]

Thomas: [00:05:19] Laying into the mother easy. The OECD is having to go. The European Union's having. Go saying like, oh, you're going to create a wage price spiral with this. That's and it is, you know, potentially. [00:05:29][10.1]

Adam: [00:05:30] And then it's like, check the history books. So check, check the record we've got like this was in from 1920. If things were going to turn pear shaped, wouldn't I turn pear shaped by now? [00:05:39][9.8]

Thomas: [00:05:40] Well, this is the thing. The government does have the ability to pause the indexation and they've done that before. They did that in the oil crisis in the back in the seventies and then I think in 2015 or something like that. Yeah, 2015. They have the ability to pause it and that's what they're sort of like or everyone's ganging up on them now to say you should you should really pause this. Right? The other, the other thing that's sort of interesting about Belgian's scenario is that the wage differential between Germany and France, their neighbours really matters because like if you thinking about setting up a business in Belgium, you can get like, oh, I could go to Belgium or I could go to Germany. So the wage differential starts to impact that decision. Right? And and that's what they're saying. One of the key things here is like Germany doesn't have indexation and wages aren't going anywhere near as fast. So that makes Belgian labour less competitive relative to the Germans. And for Belgium, they're 4/5 of their GDP comes from from exports. So it's a bit of a sensitive issues. And then the last time when they paused it back in 2015, that wasn't because of runaway inflation, it was because the fear that this wage differential with the neighbours was the wage gap was getting too big. [00:06:53][73.7]

Adam: [00:06:54] The good if you are living on the border like in Germany, but like working in Belgium, you just paying like German prices for everything but earning Belgium wages as inflation goes on a tear away. Yeah, like I don't know, I'm not sure if it's it's probably a massive. [00:07:09][14.9]

Speaker 1: [00:07:10] River or something that runs the border makes that's a little impractical. [00:07:15][5.8]

Thomas: [00:07:16] Flying. [00:07:16][0.0]

Speaker 1: [00:07:16] Scenarios. Right. [00:07:19][2.2]

Adam: [00:07:19] So what's the problem with it then? So is it is it going to end badly? [00:07:23][4.0]

Thomas: [00:07:24] Yeah. I mean, I think the problem is, is the idea of a wage price spiral and that getting out of hand. But I feel like the more I look at this fear of a wage price spiral, the more it feels like workers are getting screwed in that story. Like we're not looking at other ways to keep costs down. There is a soul like, well, we don't want a wage price spiral, but like what's hidden behind that is the request is like, Hey, we're asking all workers to accept a pay cut to make sure inflation doesn't get out of hand. And it's like, well, yeah, okay. Like in Australia, real wages have gone nowhere for over a decade. Profits have done very well, or that's with the mining sector, but still profits are doing quite well. It's like, why are we just assuming that we're going to push this burden onto onto workers and ask people to take a real pay pay cut? Is that really the best we can do? [00:08:14][49.8]

Adam: [00:08:14] Yeah. And it seems like the RBA is they're hoping for unemployment to rise too, which is another way. [00:08:20][5.2]

Speaker 1: [00:08:20] You know, like, oh. [00:08:22][1.3]

Adam: [00:08:24] So we're kind of going well we can, we're worried about the wage price spiral, so we're giving you a, an effective pay cut. But also we're hoping that unemployment goes up because that'll help get inflation under control as well, which is it's another way of saying we hope that more people lose their jobs. [00:08:39][15.1]

Speaker 1: [00:08:40] I guess things like. [00:08:41][0.6]

Adam: [00:08:41] The solution to inflation is like just putting people out of work and making life miserable for people in a high inflation environment. [00:08:49][7.8]

Speaker 1: [00:08:50] Yeah. Is that really our best solutions for bringing inflation down is just kick people. Yeah, I think. [00:08:57][6.6]

Thomas: [00:08:57] I think this is where I'm picking the the festering wound at the heart of. [00:09:01][4.4]

Speaker 1: [00:09:01] Capitalism here. [00:09:02][0.6]

Adam: [00:09:05] But Thomas, what's this about poor wages causing memory loss? [00:09:09][3.7]

Thomas: [00:09:09] Yeah. This is a new study in the American Journal of Epidemiology. Yeah. Saying that persistently low wages, earning low wages through your life is associated with more rapid memory decline in later life. Yeah, the present results presented at the 2022 Alzheimer's Association International Conference. [00:09:28][19.3]

Adam: [00:09:29] It's not just a desire to forget. [00:09:30][1.3]

Speaker 1: [00:09:33] Again getting kicked by the RBA. Your whole life. [00:09:36][2.6]

Adam: [00:09:38] Getting kicked by the government. Your whole life? [00:09:40][2.3]

Speaker 1: [00:09:41] Not really. Not. Not. [00:09:43][1.3]

Adam: [00:09:44] I like to remember that if I can help. [00:09:45][1.4]

Thomas: [00:09:45] It like we know, we know that lower income is associated with other adverse health impacts. So it's this depressive symptoms, hypertension and obesity are all associated with low wages. I mean, it's really interesting. It's not like they don't talk about why like it's not a I don't identify the causal link. It's more of a just a like a a noting, a correlation saying, look, we'll look at this. People who earn low wages have bad memory as they get old. [00:10:14][29.0]

Speaker 1: [00:10:15] But that but that would be. [00:10:15][1.0]

Adam: [00:10:16] There'd be a lot of other things that would correlate as well, wouldn't there, with, you know, like, I don't know, like low wages, low socioeconomic conditions, low. You know, if you look at things like smoking and drinking and all that stuff, it's probably more prevalent in low socioeconomic. [00:10:30][14.4]

Thomas: [00:10:31] Yeah. Yeah, that's that's right. That's right. I mean, yeah. The way they talk about it saying the the head researcher, Dr. Katrina Casey said our research provides new evidence that sustained exposure to low wages during peak earning years is associated with accelerated memory decline later in life, like sustained exposure to low wages. Like that's not really the that's. [00:10:54][22.2]

Speaker 1: [00:10:54] Not that's not the. [00:10:57][3.0]

Thomas: [00:10:57] Causal link. [00:10:57][0.5]

Speaker 1: [00:10:58] They're like like, oh, I've been exposed to. [00:11:00][2.2]

Thomas: [00:11:01] Have been contaminated. [00:11:01][0.2]

Speaker 1: [00:11:02] By low way. It's right like I said radiation like you re living next there was phone tower your whole life just being belted with low wages. My whole life. Yeah. [00:11:13][10.6]

Thomas: [00:11:13] So that's right. So. [00:11:14][0.5]

Speaker 1: [00:11:14] So the causal. [00:11:15][1.1]

Thomas: [00:11:15] Link must be through something else, like through substance abuse or poor diet even could be poor nutrition or it could be stress, you know, like low, low wages. And having low income means you probably stressed a lot more than someone with lots of money or with higher wages. I mentioned stress and wages are correlated. So it could be could be even stress. So they don't really say so they don't write, you know, they just sort of noting that it's that it's that it's a there's a correlation there. [00:11:43][27.6]

Adam: [00:11:43] What can we do? What can we do about it? Anything. [00:11:44][1.3]

Thomas: [00:11:45] Give people more money. Yeah, it's. [00:11:47][1.4]

Adam: [00:11:47] Easy. Yeah. Stop kicking them. [00:11:49][1.3]

Thomas: [00:11:49] The other thing is like the the impacts are not huge. So they took a bunch, a cohort of people born between 1936 and 1941 and then tracked them from 2004 to 2016 and saw what happened to to their memory decline. So sort of like between sort of 75 and 85. And what they're finding is that on average, if you had lower wages, it added one extra year of decline over a ten year period. So it's sort of saying by the time you're 85, you have the cognitive abilities of an 86 year old. [00:12:20][31.5]

Adam: [00:12:22] You know, the other way around. By the time you're 86, you've got the cognitive abilities of an 85 year old. [00:12:27][5.8]

Thomas: [00:12:28] No, it's worse. [00:12:28][0.5]

Adam: [00:12:29] If you had low wages. [00:12:29][0.7]

Thomas: [00:12:30] No. [00:12:30][0.0]

Adam: [00:12:31] Oh, no, you're right. Sorry. Yeah, yeah, yeah. [00:12:33][1.7]

Thomas: [00:12:33] So low wages guarantee their item. [00:12:35][1.5]

Speaker 1: [00:12:35] To third in your maths. You need to take this as an example to your employer for the year, but no memory is going to need to pay me more. [00:12:48][12.4]

Adam: [00:12:50] All right. Why don't we pause here? We'll grab a quick word from this week's sponsor. Be back with more comedian versus economist right after this. Welcome back here on Canadian versus Economist. You can of course, send us an email CV at Equity Mates dot com or via the website Equity Mates dot com forward slash CV. Or you can find us on Instagram and Facebook at CV podcast. Thomas Why could having rich friends make me wealthier? [00:13:15][25.1]

Thomas: [00:13:16] Yes. Is a new study out of Harvard cutting edge science this week. Raj Chetty, a researcher in Harvard, found that if you grow up in places where you have access to wealthier people in your social network, you end up more successful and wealthier as an adult. Right. Yeah. And the impact is actually incredibly powerful. So as I say, saying one of the most powerful predictors of whether you rise out of poverty is how many people you know who are well-off and are saying it's more important, has more impact on your outcomes in life. Since then, school quality, job availability, community cohesion or family structure really is more important. [00:14:00][44.6]

Speaker 1: [00:14:01] Than all of us. [00:14:01][0.4]

Adam: [00:14:05] Well, so don't pay for private schooling for your kids. It's a waste of money. Just hook them up with some rich friends. [00:14:10][5.9]

Thomas: [00:14:11] Yeah, well, paying putting poor kids in private schools helps. But not because of the school. [00:14:16][5.5]

Adam: [00:14:17] Not because of the school. [00:14:17][0.6]

Thomas: [00:14:18] Because they have wealthier access to wealthier friends. [00:14:20][2.3]

Speaker 1: [00:14:22] Yeah, right. [00:14:23][0.9]

Adam: [00:14:24] We're really tackling the the class divide here. [00:14:27][3.1]

Speaker 1: [00:14:27] Yeah. So if you're low income. [00:14:29][1.7]

Adam: [00:14:30] You're going to have terrible memories of no memory later on. But if you're rich and you hang around with rich people, then you'll be even richer. Like it seems like the with with was setting off some trajectories here that I don't know is this is people talking about fate. [00:14:47][16.8]

Speaker 1: [00:14:49] Is this. [00:14:49][0.2]

Adam: [00:14:49] Is this what I mean fight is like if you're low income, then you're going to have no no memory later on. And and if you're you hang around with rich people within you, you know, you do that and everything else doesn't matter because this is fate. [00:15:03][13.5]

Thomas: [00:15:05] Yeah. No, I don't know. I mean, I don't know. I mean, it's interesting to say that the Harvard study says it. We can't identify the causal link, so we don't know doesn't identify why. And so you go to sort of theories like come up with theories about why it might work this way. [00:15:21][16.1]

Adam: [00:15:21] These studies are pretty flimsy. The last one didn't didn't have a causal link either. It was just a correlation. And here we are again saying, look, this happens. We don't know why. Yeah. [00:15:30][8.2]

Thomas: [00:15:31] Well, that's that's part of the science. You observe the correlation and then you try and come up with a theory why and then test the theory. One, one of the theories is was information, all this sort of information transfer that if you hang out with wealthy people, they tell you how to play the game, they help you get into good schools, they help you get into college and that sort of thing. But there's a dosage effect in this, which is interesting. So if you're a poor person who moves to an economically diverse neighbourhood at the age of two, you do much better than if you were to move there at the age of 14. [00:16:01][30.9]

Speaker 1: [00:16:03] Yeah. [00:16:03][0.0]

Thomas: [00:16:04] So the more time you spend the, the bigger the impact. But there's no informational transfer for two year olds. You're not helping a two year old get it like access into college and helping them do the tests and those sort of things. [00:16:19][15.1]

Adam: [00:16:19] Yeah. Yeah. [00:16:20][0.5]

Thomas: [00:16:20] So some are interesting to sort of like think about what the what that what the causal link is. [00:16:24][3.9]

Adam: [00:16:25] I don't know. It seems, it seems odd that it's about, it's focussed on wealthy like say if you're having rich friends then you're like because, because wealth as again wealth comes from somewhere. I mean there's, you know, some of it you'd be born into I guess. But you know, if you're wealthy then chances are you've, you're quite an intelligent person. Like that would make more sense to me that your, you've made your wealth somehow. And therefore, if you're surrounding yourself with people who have who are successful and have made, you know, good investing decisions or they've made good career decisions, and they've I don't know, they're smart people who've built a business or something like that, then that's maybe more of the story here than the fact that they're wealthy. Like wealthy is a product of the person that they they are. You know what I mean? [00:17:12][47.1]

Thomas: [00:17:12] Yeah. Yeah, that's right. Like, you know, in saying it's like it's I don't think anyone's saying it's the being around money. [00:17:17][4.8]

Speaker 1: [00:17:17] Right. So there's is pool parties and like making it rain. Yeah right. [00:17:29][11.0]

Adam: [00:17:29] Yeah, yeah. [00:17:29][0.4]

Thomas: [00:17:30] Yeah. So it's, it's it's more like it's sort of like it's sort of there's some sort of behavioural thing going on there. There's another study from Yale by Nicholas Christakis who's talks about like the power of friend networks and saying like if you're in a if someone in your friend network quit smoking, then you're more likely to quit smoking. If you're someone in your friend network gains weight, you're more likely to gain weight. But also says if a friend of your friend who lives in a different town and you've never met. You gain weight, you're more likely to gain weight. [00:18:00][29.8]

Adam: [00:18:00] Oh, yeah. I'm going to really have to review my Facebook friends list. [00:18:03][3.1]

Thomas: [00:18:06] So there's sort of like this sort of the our social networks define our norms. And so if you're around people who are, you know, applying themselves, wanting to be engineers, wanting to earn high income, who have good money habits, that just naturally affects how you are and how you are in the world. [00:18:23][17.5]

Adam: [00:18:24] I can blame all of my last failures on my mates. I used to kick around with. [00:18:27][3.4]

Speaker 1: [00:18:32] Shout outs to Bob if he's listening and finally finished the eating degree after. [00:18:38][5.9]

Adam: [00:18:38] 25 years. [00:18:39][0.5]

Thomas: [00:18:39] One of the interesting policy implications of this is with social housing is one of the key design principles is not having it, not ghetto izing it. So not having all the social housing in one suburb, but making sure that that social housing, community housing is located in wealthier network, wealthier suburbs. You don't sort of create cities that have a rich, poor divide. Right. And one of the reasons is if you sort of if you concentrate all the poor people in one place, then that sort of you have this sort of effect if if everyone around you is poor, even though you really pushing people to try and to try and get ahead, you're not getting supported. But if you have access, even just in a social sense to people who are wealthier, then that just naturally helps you have better money habits. That seems to be what it's saying. [00:19:27][48.1]

Adam: [00:19:28] The silver lining to all that, though, is that if if the poor people are all gathered together, then they'll quickly forget about it when they're older. [00:19:34][6.0]

Speaker 1: [00:19:34] So. [00:19:34][0.0]

Adam: [00:19:38] All right, Thomas, finally, I hear that someone has managed to turn Air Jordans into some sort of Ponzi scheme. What's going on? [00:19:45][7.1]

Thomas: [00:19:45] Yeah, this story is all sorts of crazy. Yes. A character called Michael Malik Zaidi from Oregon. The papers are now calling the Wizard of Nike Town. [00:19:55][9.4]

Adam: [00:19:57] Where Nike was founded in Oregon, wasn't it? [00:19:59][1.9]

Thomas: [00:20:00] It was, yes. Yeah. Yeah. Which I think is sort of how he's managed to set this thing up. Or like he's sort of he's traded a bit on his. The fact that he's located there. Yeah. Yeah. Anyway, he's set up his sort of a company called Zahedi Kicks, and now he's been arrested and facing charges of wire fraud. And wire fraud is is sort of like a if you do it, if you set up a Ponzi scheme, that's what you get charged with. [00:20:26][26.6]

Adam: [00:20:27] Wife with wire fraud. Hmm. Right. [00:20:29][2.2]

Thomas: [00:20:29] Yeah. And it's. Yeah. And you get as much as 30 years convicted in in prison. If you. If you get done. [00:20:35][6.1]

Adam: [00:20:36] Yeah. So what did he do? [00:20:37][0.9]

Thomas: [00:20:37] So basically, he's selling. Selling shoes he didn't have. [00:20:41][4.0]

Speaker 1: [00:20:42] Yeah, yeah. I don't do it. Yeah. Yeah. [00:20:45][2.7]

Thomas: [00:20:45] You saying when the thing came undone, there was the Air Jordans. 11. Cool Grey. [00:20:50][4.6]

Adam: [00:20:51] I think the Air Jordan two. Oh, was it. Maybe not. Maybe it is 11. [00:20:54][2.9]

Thomas: [00:20:54] I don't know. I don't know. Yeah, it's right now. It was, it was news to me. They're still making Air Jordan. I was like, wow, really? [00:21:00][6.4]

Adam: [00:21:01] Oh, dude. Definitely making Air Jordans. The Jordan brand, in fact, is like, it's bigger than ever. Yeah, right. It fascinates me that Jordan is still such a big brand. And given that he retired like, what, 20 years ago. [00:21:16][15.0]

Speaker 1: [00:21:16] So maybe that. [00:21:17][0.4]

Thomas: [00:21:17] Maybe even more. Yeah. Yeah. So the 11 cool Greys were selling retailing for 225. He was advertising. They had them on his website for $115 and he sold 600,000 pairs. [00:21:33][15.9]

Speaker 1: [00:21:37] Everyone's like, Oh, I been a good that's a bargain. I can't believe no one picked up on it. Like, do you have a warehouse? Nope. I'm just running it out of my basement. [00:21:54][16.8]

Adam: [00:21:54] So you've got. [00:21:55][0.4]

Speaker 1: [00:21:55] 600,000 pairs of shoes in your basement. [00:21:57][2.0]

Adam: [00:21:58] And there and there I was looking at this concept the other day. A friend of mine's just started selling, you know, buying and selling second-hand stuff on eBay. There's this new thing called Dropshipping. And so driving is actually a thing now where all these people that list on marketplaces, Amazon, eBay or whatever, then no one's holding any stock. And are you? Yeah. You know, like, I might just list something that Kmart has and hope that you're just browsing eBay and you're not looking at Kmart website. And I just go, Well, I'll just put like 20% mark-up on it, almost Kmart selling and they see it on eBay for me selling it and I go, Oh, like that on my buyer. Yeah. And then I just put the order with Kmart and I don't even handler ever. I just list them as like the, the recipient on the order and Kmart ships it to them directly. So yeah, it's definitely a thing. Yeah. But this is like next level. [00:22:51][53.4]

Thomas: [00:22:52] This is next level. Yeah, yeah, yeah. So it's a he sold 600,000 pairs. He had 6000 or so. He had some. He had some. Yeah. He's got a firehouse. He has a warehouse. Yeah, yeah, yeah. He's been running for ten years so he has been has been selling. Yeah, yeah he's been selling but yeah. So he sold 6000 so he had 6000. He sold 600,000. [00:23:13][20.9]

Adam: [00:23:14] Wow. [00:23:14][0.0]

Thomas: [00:23:15] I don't know what he how he thought he's going to get away with that. The thing that happened is with COVID and everyone stuck at home, people started trading Jordans, Air Jordans like an asset and just buying and flipping them. The article I read interviewed a guy named Jeremy Rogers, 30, 30 years old, a clinical researcher from Fort Worth, Texas. He said that he bought 100 pairs of the Air Jordan, 11 cool. Grey, 300 pairs of the edge, Jordan four retro lighting, 225 pairs of the Jordan four retro military bat black, 100 pairs of the Jordan four retro shimmer and 20 pairs of the Travis Scott Jordan one high fragment. [00:23:54][39.3]

Speaker 1: [00:23:55] For personal use. Mr. Tax Man No, I just I do a lot. [00:24:02][6.2]

Adam: [00:24:02] Of basketball, a. [00:24:03][0.9]

Speaker 1: [00:24:03] Lot of riding, very active. And so, yeah, so you. [00:24:07][4.2]

Thomas: [00:24:07] Spend $143,000 on sneakers. [00:24:10][2.5]

Speaker 1: [00:24:11] That. [00:24:11][0.0]

Thomas: [00:24:11] You didn't receive over 15 credit cards. Well, he said, but the ones he did get because he got such a good price for them, the Jordans shimmers, he bought 460 and ended up selling for 315 apiece and made 15 grand on the sale. So. So it sort of created this industry of people kind of flipping Jordans. [00:24:33][22.0]

Adam: [00:24:33] Because the supply chain shocks during COVID hit the sneaker world pretty hard. And he couldn't get he couldn't get like new sneakers for love nor money in that during the peak of COVID disruption. So yeah, the price of there was like no sneaker sales just didn't exist. [00:24:49][15.3]

Thomas: [00:24:49] Yeah, right, right. [00:24:50][1.0]

Adam: [00:24:50] So you couldn't get you couldn't get the Nike's your after. And so I think the price of them just went through the roof. [00:24:54][3.8]

Thomas: [00:24:55] Yeah, yeah, yeah they did. Yeah. Up 100% they said for one of the one of the sneaker models. [00:25:01][5.7]

Adam: [00:25:01] So is this actually a Ponzi scheme or is this more this is just him ripping people off? Isn't that this is just good old fashioned fraud? [00:25:09][7.6]

Speaker 1: [00:25:10] Fraud. [00:25:10][0.0]

Thomas: [00:25:10] Well, this this is the thing, right? So if he had just sold stuff he didn't have and rip people off, he'd probably be looking at 5 to 10 years jail or something, but he turned it into a Ponzi scheme. So if you bought from him and he couldn't deliver and he often couldn't, then he would give you either the the retail price back. So if you bought it, the discount went 115 and he couldn't deliver, he would give you $225 back. Or he would give you store credit. [00:25:40][29.7]

Adam: [00:25:40] That's helpful. That reminds me when I remember when McDonald's launched McCafe and they were trying to get people to buy their coffees and now like, look, if you don't like the coffee, we will give you a free coffee. He's just like, Well. [00:25:53][12.5]

Speaker 1: [00:25:54] I didn't like the coffee. I don't want another one. [00:25:56][1.8]

Thomas: [00:25:58] So he's giving people more money than they put in so and so some people are making money off this, but the money is coming from new people coming in and buying. And so he's he's cycling the new money coming through. That's the nature of a Ponzi scheme, is that it's always going to collapse once new people new people stop coming into the scheme. And so that's what he was doing. He was sort of like cycling this through. And people people were like, this is this is great. Like, I'm I can't lose either. I get the shoes at a discount price or I get paid out. Mhm. And I was like I can't lose. And so more and more people are getting involved it seems. And then it collapses. But it's that Ponzi dynamic that makes it wire fraud. Right. Which means that he's now looking at 30 years in prison rather than five, 5 to 10 or something. [00:26:48][49.7]

Speaker 1: [00:26:48] Right. [00:26:48][0.0]

Thomas: [00:26:49] Mhm. If he, if he survives a mob turned up at his warehouse and, and shots were fired and the. [00:26:56][6.2]

Speaker 1: [00:26:56] Police were called still I think. [00:27:01][5.9]

Adam: [00:27:02] He got away. It was saved. It was saved. [00:27:03][1.6]

Speaker 1: [00:27:04] Fleeing on foot really quickly. [00:27:06][2.1]

Adam: [00:27:12] All right. Dozens for this week. We'll leave it there. Thank you so much for listening. We really do appreciate your support. Don't forget to check out all the other great shows across Equity Mates media and of course, check out Finn Fest happening October 15. Head to Equity Mates dot com forward slash fin fest for all the information. Thank you to all of us. Thank you everyone out there for listening. We'll talk to you again next week.