Indian director of ‘3 euro smartphone’ manufacturer has been arrested for fraud
Director Mohit Goel of the Indian company Ringing Bells, the manufacturer of the 3 euro Freedom 251 smartphone, has been arrested on suspicion of fraud. The company is accused of not having delivered some of the ordered smartphones.
One of the distributors has accused Goel of not delivering the smartphones even though they were paid for. This distributor, Ayam Enterprises, says it paid about 42,000 euros after Goel persuaded the company to start distributing the Freedom 251. The distributor states that only half of this amount of telephones have been delivered. Ayam Enterprises employees would have been threatened with death if they kept asking for their money back. This reports the BBC.
Last year, the manufacturer said that people who ordered the phone and already paid a deposit would get their money back. Manufacturer Ringing Bells promised that the devices would be delivered in June. The demand for the mobile phone turned out to be high; the sale went through their own site, but it crashed due to the great interest. The manufacturer said it did not receive any government subsidy for the production of the device.
A director of an Indian supplier that supplied a low-cost tablet to the Indian government said last year that the cost of the Freedom 251 components is eight times higher than the final retail price. According to Goel, the Freedom 251 smartphone has a value of 1180 rupees, converted about 15 euros. However, customers pay only 251 rupees, about 3 euros. The manufacturer sells the smartphones below cost, but provides third-party apps that cannot be removed.
Partly due to the sale of the phone below cost, the business model of the Freedom 251 has been described by several analysts as Ponzi fraud. This type of fraud is in fact a pyramid scheme originating from the investment world, where people are scammed because the money that comes in is often not invested in the production process but is used to pay previous investors.
The 3G device has a 4″ IPS screen with a resolution of 960×540 pixels. There is 1GB of RAM and 8GB of storage space, which can be expanded with a micro-SD card of up to 32GB. The Freedom 251 has a unspecified quad-core-soc with a speed of 1.3 GHz, the back has a 3.2 megapixel camera with autofocus, the front camera has a resolution of 0.3 megapixel, the battery capacity is 1450 mAh and the device runs on Android 5.1. The Freedom 251 is in fact a smartphone from the Indian manufacturer Adcom, whose logo has been taped.