Facepalm: In a turn of events that will likely surprise no one, the person behind the Escobar Phone that made headlines several years ago for its association with the infamous drug kingpin has pleaded guilty to fraud. The phones, which were rebranded Samsung Galaxy Folds, were never delivered to most customers, nor were the Escobar-branded flamethrowers he also purported to sell. However, buyers did get a certificate of ownership.
We heard about the Escobar Fold 1 at the end of 2019. The device came from Escobar Inc., a company founded by Roberto Escobar, the brother of Pablo Escobar. It owns the intellectual property rights related to the deceased crime lord.
The Escobar Fold 1 was priced at just $349 and was obviously a rebranded Royole FlexPai. The successor, the $399 Escobar Fold 2, was a Galaxy Fold. Techtuber Marques "MKBHD" Brownlee showed how very little effort had gone into hiding this fact – Samsung's logo was clearly visible beneath the flimsy gold stickers.
Olof Gustafsson, CEO of Escobar Inc., said at the time that the company bought Galaxy Folds that failed Samsung's quality control standards, had been returned, or were classed as overstock by retailers who overestimated how many would sell.
It was speculated at the time that selling the devices at such an enormous loss was only possible by not actually shipping the phones to the vast majority of buyers – which is exactly what happened.
Courthouse News Service reports that Gustafsson pleaded guilty to wire and mail fraud and several counts of money laundering last week. He had been arrested in Spain two years ago and extradited to the US in March.
Escobar Inc. also "sold" Escobar flamethrowers, riding the wave of popularity from Elon Musk's Not-a-Flamethrower sold through his The Boring Company.
But nobody who paid online for one of these products actually received one. What they got instead was a certificate of ownership, a book, or other Escobar Inc. promotional materials. This meant there was a mailing record to the customer, so when they tried to get a refund, Gustafsson referred the proof of mailing to the payment processors as "proof" that it had been shipped and received by the buyer.
Gustafsson also marketed gold-plated iPhones for $500 and Escobar cash, which was advertised as the world's first "physical cryptocurrency."
Tech influencers such as MKBHD received poorly made samples of the phones in order to stimulate interest and demand.
It appears that plenty of people were taken in by the scam. Gustafsson wired more than $307,000 between December 2019 and June 2020.
Gustafsson has agreed to pay up to $1.3 million in restitution to victims. He will be sentenced on December 5, when he faces up to 20 years in federal prison for each fraud count and up to 10 years for each money laundering count.
Escobar Phone creator pleads guilty to scamming buyers, never delivered devices
