The former CEO of Escobar Inc., Olof Kyros Gustafsson, has pleaded guilty to serious charges of fraud and money laundering, as reported by the US Department of Justice. This case centers around the company's controversial marketing of the Escobar Fold 1 and Escobar Fold 2 smartphones, which gained notoriety after a revealing unboxing video by tech reviewer Marques Brownlee in 2020.
According to the plea agreement filed by United States attorneys, Gustafsson and Escobar, Inc. engaged in deceptive practices to promote their products, which were branded with the image of notorious drug lord Pablo Escobar. They solicited orders for the phones and other merchandise, while simultaneously attempting to inflate demand through partnerships with tech reviewers and social media influencers.
Despite receiving payment for these orders, the company failed to deliver the products to customers. Instead, Gustafsson and his associates misappropriated customer funds, laundering the money for personal expenses. The DOJ’s press release highlights that customers who expected their phones were instead sent a “Certificate of Ownership,” promotional books, or other marketing materials, all aimed at creating a false record of shipment.
In the critical video by Marques Brownlee, he unboxed an Escobar Fold 2 smartphone, only to discover that it was, in fact, a Samsung Galaxy Fold — a high-end device retailing for nearly $2,000. This revelation was particularly shocking given that Escobar, Inc. was selling the phone for just $400, merely slapping a gold sticker on the Samsung device to pass it off as their own.
Additionally, the company marketed other questionable products, including a $500 Escobar Flamethrower, which was modeled after The Boring Company's Not-A-Flamethrower, and the $500 Escobar Gold 11 Pro Phone, presented as a refurbished Apple iPhone 11 Pro. They even introduced Escobar Cash, which was touted as the world's first “physical cryptocurrency.”
As Gustafsson faces the consequences of his actions, a judge has set a sentencing hearing for December 5th. He could potentially receive up to 20 years in federal prison for the fraud-related charges and an additional 10 years for money laundering. Furthermore, Gustafsson may be required to pay up to $1.3 million in restitution to affected customers.
This case serves as a stark reminder of the importance of consumer vigilance and the risks associated with online purchases from unverified sources. As legal proceedings unfold, the implications for Escobar Inc. and its operations remain to be seen.
