If you thought a $4 smartphone was too good to be true, you'd be right. The BBC reports Mohit Goel, who last year announced the Freedom 251, a $4 device meant for emerging markets, has been arrested after accepting 3m rupees (about $45,000) and only delivering inventory worth about half that.

According to the report, Goel managed to convince Ayam Enterprises to give him the money in exchange for distribution rights to the device. But Goel didn't deliver, prompting many people to label the phone as a "ponzi scheme."

Multiple complaints were filed after staff of Ayam Enterprises allegedly received death threats after asking Goel to fulfill his end of the deal.

Following the device's original announcement, a government investigation was launched in an effort to figure out how the smartphone would be offered at such a low price. At the time, Goel said his company, Ringling Bells, would take a loss, but that he was "happy" to do it.

It was a Ponzi scheme

"It's important for us to expose these scams because innocent people end up losing their hard-earned money," said police spokesman Rahul Srivastava, who confirmed Goel's arrest.

Preorders for the Freedom 251 phone opened last February, with deliveries promised by June. However, orders have gone unfulfilled, and fears of the device being part of a larger scam appear to be confirmed.

There are a lot of really good handsets on the market that are also affordable. The Freedom 251 is not one of them.

Goel is expected to appear in court following his arrest.