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Earlier this month, we shared a report stating that a federal criminal investigation was under way focused on the internal theft of sample sneakers from Nike and the reselling of such product. Today, we find that Nike is suing the former employees alleged to be involved in the sample scheme.
Nike has filed a federal lawsuit against former employees, Kyle Yamaguchi, Tung W. Ho, and Denise Yee, as well as Yamaguchi’s wife Shu-Chu Yamaguchi and sneaker reseller Jason Keating. The lawsuit lists trademark infringement, fraud, and breach of contract among the allegations, reports Oregon Live. A jury trial is sought and damages include the profits made from the sale of unauthorized samples.
The scheme is said to have run from 2006 to 2014. According to the lawsuit, Yamaguchi worked as a Nike promotional product manager from 2006 to 2012. Yamaguchi was then replaced by Ho, who Yamaguchi “handpicked” upon leaving Nike to start his own business. During their time as promotional product managers, both Yamaguchi and Ho had access to order sample pairs of Nike sneakers from factories in China, a privilege reserved to only a limited group of employees.
According to the lawsuit, Yamaguchi kept the samples that he ordered and then sold them. After Yamaguchi left Nike, Ho then ordered the shoes and sold them to Yamaguchi. They were then resold to Keating and other buyers for a percentage of the total sales. According to court documents, Ho told investigators that he stole several hundred pairs of sneakers from Nike and made $15,000 selling them on eBay. During Ho’s run as a promotional product manager, a number of the pairs he ordered from China would be shipped to him and either sold online or sent to Yamaguchi. Yamaguchi’s wife is suspected of knowing about the scheme and knowingly storing the sneakers in their house, thus the root of her charges. The lawsuit states that Yee, a former Nike employee and girlfriend of Ho, knew that the product was stolen and aided in moving the footwear. Yee and Ho were both fired from Nike in March due to their connection of the alleged sneaker theft.
The scheme became apparent and suspicious during the course of an eight-month period between 2012 and 2013, when a Chase Bank investigator discovered transfers and deposits over $221,000 between sneaker Keating and Yamaguchi’s accounts. During a four month period between 2012 and 2014, Yamaguchi wrote a total of $104,000 to Ho, according to court documents.
As stated in the previous article, Keating has been arrested for the receipt of stolen property. Nike filed a lawsuit against the former employees in the U.S. District Court of Portland on Monday, with a Nike spokesperson confirming that the lawsuit was filed to recover losses from the unsanctioned footwear sales. Stay tuned for updates on this story.
