Episode Transcript
[00:00:00] Speaker A: Welcome to behind the Scams, where the lies are bold, the schemes are global, and the flamethrowers are apparently just paper certificates. I'm Miles from Stamp Out Scams and today we're lighting the fuse on one of the boldest frauds in recent memory, starring a man who called himself El Silencio, but made a whole lot of noise with some really sketchy promises.
If you've ever thought who would buy a gold plated foldable phone from a company named after a drug lord, you're about to find out.
[00:00:35] Speaker B: Thanks, Miles, for another brilliant introduction. You truly are amazing. I wish we could bottle that voice and sell it online.
[00:00:42] Speaker A: As always, thanks for the kind words. If I could bottle and sell my deep voice, I'd probably be the richest person in the world. Imagine the market for this. Instant charisma and charm. All it takes is one shot, just like tequila.
[00:00:58] Speaker B: Okay, Miles, don't get too full of yourself. I was just giving you a quick compliment.
[00:01:02] Speaker A: I'm sorry, Nick, but I never miss a chance to speak my mind.
Why wouldn't I with a voice like mine?
[00:01:10] Speaker B: Oh, another good one, Miles. Well, enough fun for today. Onto our show. Hello and welcome back to another eye opening episode of behind the Scams. I'm your host, Nick, and as always, I'm joined by my wife and investigative co host, Sue.
[00:01:25] Speaker C: Hi everyone. Really excited about today's episode. Nick's been talking about this one all week. It's a pretty wild case.
[00:01:32] Speaker B: Wild is putting it mildly, Sue. Today we're digging into a bizarre brazen scam involving a company called Escobar Inc. And its CEO, Olaf Kyros Gustafsson, who also called himself Sir Olaf Gustafsson. And here's my personal favorite, El Silencio.
[00:01:52] Speaker C: El Silencio. Okay, now that's pretty ironic for someone running such a noisy scheme.
[00:01:58] Speaker B: I couldn't agree more. Gustafsson certainly wasn't silent about his claims, but when it came to delivering on those promises, well, that's another story altogether. Today we're exploring this complex fraud that recently led to Gustafsson's indictment by a federal grand jury in California.
[00:02:18] Speaker C: Wow. California seems to be ground zero for a lot of these large scale frauds. Right, Nick, set the stage here. Who exactly is Olaf Gustafsson and what was this Escobar Inc. All about?
[00:02:32] Speaker B: Great question, Sue. Olaf Gustafsson was the CEO of Escobar Inc. A company registered in Puerto Rico. Escobar Inc. Claimed something quite unusual. That it held exclusive rights to the Persona and legacy of none other than.
[00:02:48] Speaker C: Pablo Escobar Wait, Pablo Escobar, the infamous Colombian drug lord?
[00:02:53] Speaker B: Exactly. Pablo Escobar, head of the Medellin cartel, notorious drug trafficker, and once among the wealthiest criminals in history. Gustafson and Escobar Inke capitalized heavily on this legacy to promote and market various consumer products.
[00:03:11] Speaker C: That's crazy. So they actually use Pablo Escobar's notoriety to lure customers? If my drug lord trivia is accurate, isn't Pablo Escobar long gone?
[00:03:23] Speaker B: Your drug lord trivia is right on the money, Sue.
Pablo Escobar, the infamous Colombian drug lord, died on December 2, 1993. He was killed in a rooftop shootout with Colombian national police in Colombia after being tracked down following a 16 month manhunt. But that didn't stop Gustafsson. He wisely tapped into the mystique and notoriety of Escobar marketing products that range from flamethrowers to high end smartphones. All seemingly inspired by or directly competing with popular existing products.
[00:03:59] Speaker C: Flamethrowers and smartphones. This already sounds absurdly sketchy. I mean, who needs a flamethrower with a data plan? He was like the Amazon for cartel supplies, complete with next day delivery and a you didn't see anything guarantee.
[00:04:14] Speaker B: Exactly, Sue. Can you just imagine getting a notification your flamethrower is out for delivery. Please ensure someone over 18 is available to sign. And maybe have a fire extinguisher handy.
[00:04:28] Speaker C: I know. It's like he was running a one stop shop for all your questionable needs with a loyalty program that rewards you with free shipping on your next order of night vision goggles and untraceable burner phones. I half expected him to offer a subscription box this month. Enjoy a curated selection of tactical gear and artisanal disguises perfect for the discerning fugitive.
[00:04:53] Speaker B: As a reminder, sue, appearing all week at your local comedy store. Anyways, sue, you have no idea how deep this rabbit hole goes. For example, back in July 2019, Escobar Inc. Started marketing something called the Escobar flamethrower. Now get this. Elon Musk's the Boring company had famously sold a not a flamethrower device for around $500.
Escobar Inc. Advertised their own at just $249.
[00:05:23] Speaker C: Half the price. That sounds way too good to be true. But knowing scammers, I bet there's a CA, right?
[00:05:29] Speaker B: You're spot on, Sue. Customers eagerly paid their $249 expecting this impressive flamethrower. But did they ever receive it? Of course not. Instead, Escobar Inc. Mailed them something entirely different. Usually just a certificate of ownership.
[00:05:48] Speaker C: Wait, a certificate? That's just absurd. So people were essentially paying hundreds of dollars for a piece of paper?
[00:05:54] Speaker B: Exactly. And this wasn't a one time thing. This became their standard practice across various products. They would claim to have sent the item using the mailing of certificates as proof of delivery, cleverly preventing many customers from successfully disputing the charges.
[00:06:15] Speaker C: Wow, that's just ruthless. And was Gustafsson directly involved in all this?
[00:06:19] Speaker B: According to the indictment, he wasn't just involved, he orchestrated it. Gustafsson was the driving force behind identifying popular products in the marketplace, then falsely marketing similar items at dramatically lower prices, leveraging Escobar's infamous brand to make these scams appear legitimate.
[00:06:39] Speaker C: This sounds so elaborate. So how long did this scam run?
[00:06:42] Speaker B: The scam reportedly ran from around July 2019 until at least November 2023, affecting customers all over the United States, including multiple victims in California. It was extensive and very well planned.
[00:07:00] Speaker C: I'm curious, Nick, did Escobar Inc. Actually deliver any real products at all, or was it all completely fake?
[00:07:06] Speaker B: Occasionally they sent out disguised versions of existing products to high profile tech reviewers or social media influencers, hoping to attract even more customers through positive reviews. For example, they'd wrap a Samsung Galaxy Fold phone in gold foil and label it as their Escobar Fold two phone.
[00:07:29] Speaker C: Oh, wow, that's really sneaky. So reviewers genuinely thought these were legitimate products? I can just imagine the reviews. Five stars. This garden hose is perfect for watering my plants. And by plants, I mean my secret lair's escape route. Or this smartphone has excellent reception even in underground bunkers. Plus, the Flamethrower app is a real game changer for backyard barbecues. It's like they were running a masterclass in deception, complete with a customer service hotline.
[00:08:03] Speaker B: I know. Can you imagine? Press 1 for product support, press 2 for plausible deniability.
I bet they even had a Rewards program. Buy 10 sticks of dynamite and get a free pair of night vision goggles. Perfect for those late night gardening sessions or whatever else you might be up to. We will never ask what that might be. So initially, reviewers did leave genuine reviews on what they thought were legitimate products. Several influencers unknowingly gave positive reviews because they received functional phones, just rebranded existing devices. But regular customers weren't so lucky. They paid and got nothing but promotional materials or worthless certificates.
[00:08:50] Speaker C: That's incredibly deceptive. And damaging to the influencers credibility as well, I imagine.
[00:08:56] Speaker B: Definitely. Some influencers later exposed the scam once they realized they'd been duped. But by then, many customers had already lost significant money.
[00:09:06] Speaker C: It's heartbreaking. How widespread was this financially?
[00:09:10] Speaker B: According to the indictment, we're looking at millions of dollars. Customers made payments through platforms like PayPal, Stripe, Coinbase, and direct wire transfers to various banks worldwide. Gustafsson and his co conspirators then allegedly laundered these funds internationally, making the scam harder to trace.
[00:09:30] Speaker C: And this all went unnoticed for nearly four years?
[00:09:33] Speaker B: Unfortunately, yes. They structured their financial operations meticulously, transferring money through multiple international accounts, moving it quickly between banks in the U.S. sweden, Abu Dhabi and Dubai. A classic money laundering operation.
[00:09:52] Speaker C: Now, Nick, isn't the following of the money the type of work you did during your time as a special agent with the U.S. treasury Department? You know, know, Eliot Ness type stuff?
[00:10:02] Speaker B: While we weren't considered untouchable like Eliot Ness, it is exactly the same work I used to perform.
Following of the money is often how these types of crimes are solved.
Although I don't think Eliot Ness and his boys were following too much cryptocurrency back then.
[00:10:23] Speaker C: Probably not, Nick, but can you give us a simple explanation of what money laundering is? Something simple, not something with a lot of geek speak?
[00:10:33] Speaker B: Sure. I know we hear the term money laundering in association with crimes. It's like giving your money a disguise so it can blend in with the good guys. Imagine if your cash put on a tuxedo to attend a fancy party, hiding its shady past. Essentially, it's a way to make illegal money look like it came from a legal source.
[00:10:57] Speaker C: Interesting. What are some of the ways crooks accomplish this?
[00:11:00] Speaker B: Some of the ways crooks will launder money include using shell companies to hide the true source of funds, funneling money through complex layers of financial transactions to obscure its origin, and investing in legitimate businesses to mix illicit funds with legal revenue. These methods help disguise the illegal nature of the money, making it difficult for authorities to trace. Additionally, international transfers and offshore accounts are often used to further complicate the money trail.
[00:11:34] Speaker C: Wow, Nick, this is all pretty complex as well as overwhelming. Before we dive into more examples, can you tell us quickly, what charges is Gustafsson facing now?
[00:11:43] Speaker B: He faces multiple serious federal charges, including conspiracy to commit wire fraud and mail fraud, actual wire and mail fraud, conspiracy to engage in money laundering, and numerous individual counts of money laundering.
This could result in decades of prison time. If he's convicted, it seems like justice.
[00:12:05] Speaker C: Might finally catch up with him. But there's still a lot more to unpack here, right?
[00:12:10] Speaker B: Absolutely, Sue. We will definitely need to dig deeper into some specific cases, including exactly how Victims were tricked into buying products like the Escobar Fold phones and the mysterious Escobar Cash, which was billed as the world's first physical cryptocurrency, believe it or not.
[00:12:29] Speaker C: Oh, no. Really? That sounds like another unbelievable layer to this scam.
[00:12:33] Speaker B: It certainly is. It is one of the more bizarre schemes and scams I have ever seen or experienced.
[00:12:41] Speaker C: Can't wait to hear more. This case is definitely not your basic scam. It's like the classic buy a bridge con, but with extra sprinkles of deception.
[00:12:52] Speaker B: I know I hate to say it, but picture a scam so obvious it might as well wear a neon sign saying I'm a scam.
It's the kind of scheme that makes you wonder if these guys took a course in scamming 101 and barely passed. But you know what, Sue? Whatever hare brained scam these guys concocted, they were making lots and lots of money with it. That's the incredibly crazy thing about all this.
[00:13:29] Speaker C: Sadly, that's true. So, Nick, let's dive deeper into specific examples of how Escobar Inc. Pulled off this elaborate scam, starting with those infamous Escobar fold phones. Honestly, Nick, how did people fall for this?
[00:13:45] Speaker B: You know, it all comes down to clever marketing and deceptive practices. So let's talk about the Escobar Fold phone. This product launched around December 2019.
The scammer advertised it as a high quality fold foldable phone. A real phone like this was typically priced around $2,000 at that time.
This was similar to pricing for the Samsung Galaxy Fold. But this scam phone was offered for just $349.
Not a bad deal.
[00:14:27] Speaker C: Wow, that's insanely cheap for a foldable phone phone. Didn't that set off alarm bells?
[00:14:32] Speaker B: You'd think so, right? But they had a clever tactic to build credibility.
Gustafson sent actual Samsung Galaxy Fold phones wrapped in gold foil, disguised as Escobar Fold phones to prominent YouTube tech reviewers. Reviewers unboxed these devices, praised their quality, and inadvertently helped Escobar Inc. Gain credibility.
[00:14:56] Speaker C: Oh, no. That's incredibly sneaky. So customers saw these reviews and felt reassured?
[00:15:01] Speaker B: Exactly. Customers saw these reviews from trusted influencers, went online, and eagerly ordered their Escobar fold phones. Thinking they'd scored the deal of a lifetime. They'd pay their money, then wait and wait and wait.
[00:15:16] Speaker C: And let me guess. They never received their phones.
[00:15:19] Speaker B: Right again, Sue. Instead, customers received a certificate of ownership or maybe some promotional materials. And if they tried to dispute the charges, Escobar Inc. Would provide tracking information for the certificate falsely claiming the product had shipped.
[00:15:37] Speaker C: This is so infuriating. And they did this more than once, didn't they?
[00:15:42] Speaker B: Yes, they kept the scam rolling. In February 2020, Escobar Inc. Introduced the Escobar Fold 2 phone, claiming it was an improved version, again mimicking Samsung's latest model, selling for just $400.
[00:15:58] Speaker C: And people fell for it again?
[00:15:59] Speaker B: Unfortunately, yes. People sent hundreds of dollars via wire transfers, PayPal, cryptocurrency, you name it, but never got their phones.
[00:16:10] Speaker C: You mentioned another bizarre product earlier, Nick. What about Escobar Cash?
[00:16:14] Speaker B: Ah, yes, Escobar cash. Marketed in December 2021 as the world's first physical cryptocurrency. They advertised it in different denominations at an extremely low conversion rate.
[00:16:29] Speaker C: Physical cryptocurrency?
[00:16:31] Speaker B: What does that even mean Exactly, Sue? It's complete nonsense. Yet people bought into the novelty, paying real money for something that simply didn't exist. Again, nothing was ever delivered.
[00:16:44] Speaker C: It's astonishing and frankly sad how many victims there were. Do we know how much money they actually stole through these scams?
[00:16:52] Speaker B: The indictment mentions numerous transactions amounting to millions of dollars. For instance, in just one case, they took a $275,000 wire transfer. These were not small transactions.
[00:17:07] Speaker C: That's absolutely mind blowing. Did any specific victims come forward?
[00:17:11] Speaker B: Yes. The indictment details several overt acts involving specific victims. For example, victim JM from Las Vegas sent a wire transfer of $399 for an Escobar Fold 2 phone and never received it. Another victim EP from California sent $499 for an Escobar Gold 11 Pro phone, a supposed 24 karat gold plated refurbished iPhone. And again, nothing delivered.
[00:17:41] Speaker C: Wow. Refurbished iPhones dipped in gold. They really didn't hold back, did they?
[00:17:45] Speaker B: Not at all, Sue. And each time a customer would complain. Gustafsson's team had the perfect scam in place to prevent refunds. Those mailing receipts for worthless certificates or promotional materials.
[00:17:59] Speaker C: It's just so frustrating that they exploited trust and technology reviewers. Did any of the reviewers eventually realize they'd been duped?
[00:18:07] Speaker B: Yes.
Several reviewers realized something was off when their audiences began flooding comments with complaints. Influencers then exposed Escobar Inc. Posting follow up videos warning their viewers. But unfortunately, by then, countless victims had already lost their money.
[00:18:29] Speaker C: What an absolute mess. And Gustafsson himself, Did he openly respond to any of this?
[00:18:35] Speaker B: He was brazen and dismissive, often publicly mocking critics and taunting authorities, thinking he'd never be held accountable.
[00:18:43] Speaker C: Well, it looks like he was wrong about that, Nick. At this point in the Saga. What lessons should our listeners take away from these shocking examples?
[00:18:52] Speaker B: First and foremost, always verify deals that seem too good to be true. Second, don't rely solely on influencer endorsements. Always check multiple sources. Lastly, if a company uses a notorious dead drug cartel leader as their main business model, don't shop there. Try Amazon or ebay instead.
[00:19:16] Speaker C: Good advice, Nick. So far, we've covered how Olaf Gustafsson orchestrated this elaborate scam, tricking countless victims out of millions. Now, Nick, let's break down exactly how this scheme managed to thrive for so long.
[00:19:31] Speaker B: Great point, Sue. The longevity of this scam largely depended on two major factors. Sophisticated money laundering techniques and strategic deception on multiple fronts. Gustafsson employed a multi layered approach, cleverly using international bank accounts, cryptocurrencies and diverse payment processors to meticulously disguise the movement and ultimate destination of the stolen funds.
[00:20:00] Speaker C: That sounds incredibly complex. How exactly did Gustafsson and his team manage these transactions without getting caught earlier?
[00:20:07] Speaker B: It was indeed complex, Sue. Gustafsson and his associates opened numerous bank accounts across several countries, including the United States, Sweden and the United Arab Emirates. Victims payments were funneled into these accounts and swiftly transferred through multiple jurisdictions, often within mere hours to create a confusing tangled web of financial trails. Each transaction moved funds further away from the original source, making it increasingly difficult for authorities to follow.
[00:20:46] Speaker C: Essentially, they were playing an elaborate shell game with the money, right?
[00:20:50] Speaker B: Exactly. This rapid and frequent movement of funds across international borders not only created logistical nightmares for investigators, but also exploited gaps in the global financial monitoring system. They counted on the difficulty and delay of international law enforcement cooperation.
[00:21:09] Speaker C: Fascinating and extremely frustrating. But they did eventually slip up, didn't they?
[00:21:15] Speaker B: They certainly did. The turning point came when undercover agents from the Internal Revenue Service criminal investigations got involved. These agents posed as legitimate customers and and meticulously documented every step from initial purchases to following the intricate paths of the financial transactions.
This undercover operation provided essential evidence that unraveled Gustafson's elaborate financial network.
[00:21:46] Speaker C: Nick, that sounds like the undercover work you used to do while a special agent. Is it?
[00:21:50] Speaker B: It absolutely is, Sue. Fun and exciting stuff, but it can be very dangerous.
[00:21:55] Speaker C: I bet it can be, but that's incredible detective work on the part of irs. How crucial was cryptocurrency in this scam you mentioned earlier? It played a significant role.
[00:22:07] Speaker B: Cryptocurrency was vital, sue, because crypto transactions can offer a higher degree of perceived anonymity compared to traditional banking. Escobar Inc. Heavily promoted payments in Bitcoin and other digital currencies. Victims felt secure using crypto mistakenly believing their payments were safer. Ironically, it was precisely these crypto transactions that provided a transparent trail once authorities began serious tracing.
[00:22:38] Speaker C: Wow. So cryptocurrency actually ended up helping investigators.
[00:22:41] Speaker B: Precisely. Investigators trace blockchain transactions meticulously. What Gustafsson failed to fully grasp is that blockchain records every transaction permanently, creating a verifiable trail. His reliance on crypto ultimately contributed significantly to his downfall.
[00:23:00] Speaker C: Talk about poetic justice. So, Nick, let's talk about consequences. What penalties is Gustafsson facing now?
[00:23:07] Speaker B: Gustafson faces an array of severe federal charges, multiple counts of wire fraud, mail fraud, conspiracy to commit these crimes, and numerous counts of money laundering. If convicted, Gustafsson could face decades in federal prison, enormous fines, and restitution payments to victims.
[00:23:28] Speaker C: Good justice for the victims is paramount. But realistically, Nick, will the victim see any financial recovery?
[00:23:35] Speaker B: Sadly, sue, it's often challenging for victims in such extensive international fraud cases to get their money back fully. Authorities will pursue asset forfeiture aggressively freezing and seizing known bank accounts tied to Gustafsson and his associates. However, given the complexity and the dispersed nature of the stolen funds, complete restitution is unlikely. Victims might recover partial amounts at best.
[00:24:05] Speaker C: That's heartbreaking. So, Nick, what practical advice can we offer listeners who might find themselves targets of similar scams?
[00:24:13] Speaker B: The most important thing is to act quickly. Report immediately to your local law enforcement, the FBI, or the Federal Trade Commission. Provide detailed documentation, including payment records and communication evidence. Also, notify your banks and payment processors instantly to freeze funds or initiate chargebacks.
[00:24:34] Speaker C: Critical advice indeed, and broadly speaking. Nick, what major lessons does this shocking scam teach all of us?
[00:24:41] Speaker B: Firstly, always remain skeptical about deals that appear too good to be true. Verify thoroughly, especially when something comes at a significantly reduced price. Second, do not solely rely on influencer endorsements or promotional videos, which scammers can easily manipulate. And finally, stay updated on scam trends and tactics, because knowledge truly is power in preventing these crimes.
[00:25:11] Speaker C: Absolutely, Nick. Any final reflections on Gustafsson and the lasting impacts of the Escobar, Inc. Scam?
[00:25:19] Speaker B: Gustafson's arrogance and his belief in being untouchable proved his greatest weakness. This case highlights law enforcement's resilience and adaptability in tackling increasingly sophisticated financial crimes. As scams evolve, so do the methods of investigation and prosecutions. It is a fast changing environment, that's for sure.
[00:25:41] Speaker C: It's fascinating how even the most cunning criminals can trip over their own hubris. It's like watching a villain in a movie who thinks they're invincible, only to be outsmarted. By the hero. This case is a reminder that no matter how clever the scheme, there's always a way to unravel it with determination and teamwork.
[00:26:03] Speaker B: Special agents specializing in financial crimes played a pivotal role in breaking this case wide open. Their meticulous work in tracing complex money trails and uncovering hidden assets was instrumental in dismantling the scam. These agents used advanced forensic accounting techniques and international cooperation to piece together the intricate web of transactions. Their dedication and expertise deserve recognition and commendation for bringing justice to the victims.
[00:26:40] Speaker C: Well said, Nick. It certainly helps you understand how important their work is, especially for you, since you did the very same type of work for 25 years.
[00:26:49] Speaker B: It's hard work, but certainly rewarding. Before we wrap up, sue, let's touch on the broader implications of this scam. What does it say about the current state of online consumer protection?
[00:27:00] Speaker C: That's a great point, Nick. This scam highlights significant gaps in consumer protection, especially in the digital marketplace. It underscores the need for stronger regulations and more robust mechanisms to quickly identify and shut down fraudulent operations.
[00:27:18] Speaker B: Absolutely. And it also emphasizes emphasizes the importance of consumer education.
People need to be aware of the tactics scammers use and how to protect themselves.
[00:27:27] Speaker C: Right. Education is key. Consumers should be encouraged to research companies thoroughly, look for reviews from multiple sources, and be wary of deals that seem too good to be true.
[00:27:40] Speaker B: And what about the role of social media platforms and payment processors in preventing scams?
[00:27:46] Speaker C: They play a crucial role, Nick. Social media platforms need to be more proactive in monitoring and removing fraudulent content.
Payment processors should implement stricter verification processes and offer better support for victims of fraud.
[00:28:02] Speaker B: It's a collective effort, isn't it? From consumers to companies to regulators, everyone has a part to play in combating scams.
[00:28:10] Speaker C: Exactly. And as technology evolves, so must our strategies to protect against fraud. It's an ongoing battle, but with awareness and cooperation, we can make significant strides.
[00:28:22] Speaker B: Well said, Sue.
[00:28:23] Speaker C: It sure is. On that note, let's tell our listeners thank you for joining us again on behind the Scams.
[00:28:29] Speaker B: Before we close, sue, do you ever notice that we always close out our podcasts on a high note? A high note from you?
[00:28:36] Speaker C: Of course I do. I write the majority of these podcast scripts. You think I would close out on a high note from you? Don't be silly, honey.
[00:28:44] Speaker B: Sue, I both love and hate your honesty.
[00:28:47] Speaker C: Thanks, Nick. But I think we better get Miles to mediate this one for us as well as close out this podcast episode.
[00:28:54] Speaker A: Thanks, Sue. I think you're right. I better step in while I can. Nick. Here's the deal. Wives are always right. And if you ever forget that, just ask her.
She'll casually bring up how she told you not to assemble the Ikea bookshelf without reading the instructions and now it's a shoe rack.
Honestly, the last time a wife was wrong, historians marked it down as a glitch in the matrix.
[00:29:20] Speaker B: Great point, Miles. Thank you, buddy. Now close out this podcast for us while I go get yelled at.
[00:29:26] Speaker C: This is sue saying I won't yell at Nick, I'll just give him the silent treatment. That's much better.
[00:29:32] Speaker A: Ouch. Nick, my man, Enjoy your night. Great show. By the way, thanks for tuning in to another episode of behind the Scams. Remember folks, always keep your wits about you and your wallets close. If a deal seems too good to be true, it probably is.
Stay informed, stay safe, and join us next time for more eye opening stories. Until then, keep questioning everything and trust your instincts. This is Miles saying bye for now and see you on the next podcast episode of behind the Scams.
