The man behind the notorious Escobar Phone that captured headlines for all the wrong reasons has finally faced justice. Olof Gustafsson, CEO of Escobar Inc., pleaded guilty to wire and mail fraud along with several counts of money laundering last week, ending a years-long scam that left thousands of customers empty-handed.
Gustafsson’s fraudulent scheme revolved around selling rebranded smartphones and other products that were never delivered to buyers. Instead of receiving the devices they paid for, customers got certificates of ownership, books, or promotional materials a clever trick that allowed Gustafsson to claim items had been “shipped” when customers demanded refunds.
The saga began at the end of 2019 when Escobar Inc., a company founded by Roberto Escobar (brother of infamous drug lord Pablo Escobar), launched the Escobar Fold 1. Priced at an incredibly low $349, the device was simply a rebranded Royole FlexPai with minimal modifications.
Escobar Phone Creator Pleads Guilty to Scamming Buyers
The follow-up Escobar Fold 2, priced at $399, was even more brazen. This device was nothing more than a Samsung Galaxy Fold with flimsy gold stickers slapped over Samsung’s branding. Tech reviewer Marques “MKBHD” Brownlee famously demonstrated how easily the Samsung logo could be seen beneath these cheap stickers, exposing the scam for what it was.
Gustafsson claimed at the time that his company was buying Galaxy Folds that had failed Samsung’s quality control, been returned by customers, or were excess inventory from retailers. This explanation seemed to justify the impossibly low prices, but the reality was far more sinister.
The business model was built on deception from the ground up. Gustafsson knew that selling high-end smartphones at such massive losses was only possible if he didn’t actually deliver the products, which is exactly what happened to the vast majority of customers.
Gustafsson’s $1.3 Million Fraud Scheme Exposed
When buyers inevitably complained about not receiving their phones, Gustafsson had a ready-made defense. Since customers had received something in the mail (even if it was just a worthless certificate), he could point to delivery records as “proof” that orders had been fulfilled. This documentation was then used to convince payment processors that refund requests were illegitimate.
The scam extended beyond phones. Escobar Inc. also marketed flamethrowers, capitalizing on the buzz around Elon Musk’s “Not-a-Flamethrower” from The Boring Company. Additionally, they sold gold-plated iPhones for $500 and promoted something called “Escobar cash,” which was advertised as the world’s first “physical cryptocurrency.”
To generate buzz and legitimacy, Gustafsson sent poorly made samples to tech influencers, including MKBHD. These review units helped create interest and demand among potential customers who assumed they would receive similar products. The strategy worked, drawing in thousands of unsuspecting buyers.
Gustafsson’s criminal enterprise came to an end when he was arrested in Spain two years ago. After being extradited to the United States in March, he finally admitted guilt to the charges against him. Court documents reveal that between December 2019 and June 2020 alone, Gustafsson wired more than $307,000 as part of his fraudulent operations.
The financial impact on victims was substantial. Gustafsson has agreed to pay up to $1.3 million in restitution to those who were scammed by his fake phone business.
Escobar Phone Scam Gustafsson Faces Decades in Prison
Gustafsson’s sentencing is scheduled for December 5, where he faces serious consequences for his actions. Each fraud count carries a potential sentence of up to 20 years in federal prison, while each money laundering count could result in up to 10 years behind bars.
This case serves as a stark reminder that if a deal seems too good to be true – especially when it involves cutting-edge technology sold at impossibly low prices – it probably is. The Escobar Phone scam may be over, but its legacy continues as a cautionary tale for online shoppers everywhere.
