CEO Pleads Guilty in $1.3M Fraud Case

Every now and then, we see weird phones pop up out of nowhere. Back in 2020, one such device popped up: the Escobar Phone. This was a foldable phone that was supposedly inspired by the infamous Pablo Escobar. However, a video from tech YouTuber Marques Brownlee quickly exposed that the Escobar Phone was nothing but a scam.

The Escobar Phone scam comes to an end

Now, according to a press release from the United States Attorney’s Office in the Central District of California, the CEO behind the company that sold the phone has pleaded guilty to charges of fraud and money laundering. Olof Kyros Gustafsson, 32, was the CEO of Escobar Inc., the company that sold the scam Escobar Phone.

Now, Gustafsson faces up to 20 years in federal prison for fraud-related charges. He also faces up to 10 years for money laundering charges. He is also required to pay up to $1.3 million in restitution.

What was the Escobar Phone?

In case you’re hearing about this for the first time, Gustafsson’s company sent out the Escobar Phone to a variety of tech reviewers and social media influencers to help get the word out.

However, in the MKBHD video, he discovered that the phone was actually a Samsung Galaxy Fold with a gold sticker slapped onto it. Making it even weirder was the fact that the company was selling it for $400. This was considerably lower than the $2,000 that Samsung was charging for the Galaxy Fold at the time.

However, it makes sense. The lower price tag was meant to try and tempt customers into placing an order, an order that Gustafsson never intended to fulfill. When customers placed an order, instead of sending the phone, Gustafsson sent customers other items. This included a “Certificate of Ownership”, a book, or other Escobar Inc. promotional materials.

This was done to create a mailing record that acted as proof of a fulfilled order. Then, when customers tried to dispute the sale and get a refund, Gustafsson showed proof that the item was shipped and the customer had received it. This ultimately led to refunds getting denied. MKBHD later published a video in 2024, detailing the drama behind the phone, which led to the FBI getting involved.