The former CEO of the company that launched the Escobar Fold 1 and Escobar Fold 2 phones, similar in appearance to the ones you may remember from the 2020 video by Marques Brownlee, has pleaded guilty to fraud and money laundering, the US Department of Justice reports.
In the plea agreement, U.S. prosecutors detail how Olof Kiros Gustafsson and Escobar, Inc. took orders for phones and other products branded with the image of drug lord Pablo Escobar, distributed information about the products to tech reviewers and social media influencers to “try to increase demand,” failed to deliver the products to customers, and transferred and laundered customer money to “use it for their own needs.”
In the video, Brownlee unboxes the Escobar Fold 2 phone he was sent and discovers that it is a regular Samsung Galaxy Fold, a phone that costs almost $2,000, much more than the $400 for which it was sold by Escobar Inc. with a gold sticker.
According to the plea agreement, Escobar Inc. also sold a $500 “Escobar Flamethrower” that was “modeled after” The Boring Company’s non-flamethrower, a $500 “Escobar Gold 11 Pro Phone” that was “marketed as a refurbished Apple iPhone 11 Pro,” and Escobar Cash that was “marketed as the world’s first ‘physical cryptocurrency'”.
Instead of mailing the products to customers, Gustafsson would send them “a certificate of ownership, book, or other Escobar Inc. promotional materials” to create a record of the shipment, the DOJ press release said. Then, when the customer tried to get a refund for something that was not delivered, “Gustafsson fraudulently sent the payment system proof of the shipment of the ‘Certificate of Ownership’ or other materials as proof that the product itself had been shipped and that the customer had received it so that the refund would be denied.”
The judge scheduled a sentencing hearing for December 5, where Gustafsson faces up to 20 years in federal prison on the fraud charges and up to 10 years on the money laundering charges. Gustafsson is also ordered to pay $1.3 million in restitution.
