OK, I'll try to keep this concise since as you can see above, it takes close to an hour to explain the whole story.
After the cluster smurf that was G6, Paulo did start delivering knives to people (though not right after the show as he promised). A lot of people were already soured watching the whole thing go down but Paulo was not interested in refunding anyone.
Here are some pictures of the delivered knives (Jim Skelton returned his and pulled the videos BTW).
Some vids of the action:
http://instagram.com/p/szi5atCNrU/
http://instagram.com/p/s0v1CDiNla/
http://instagram.com/p/s03PwLiNgP/
The quality on the knives was Horrific. The detent heights weren't right, the washers were the wrong thickness, they were a mess. Every one of them had issues except the proto (which was actually assembled by a professional).
Naturally when people pay $1200-$1500 for that kind of quality, they are upset. After a brief period of balking and refusing to admit there was anything wrong with the knives, he started issuing refunds to the people who wanted them. One of the guys who paid and didn't get a knife let him just keep the money.
At first he tried to pin it on everyone else stating he was getting out of the 'knife game' because of all the haters. Then he made a 180 and said he was sorry he let everyone down and that was the last anyone's heard of him.
Ultimately, everyone either got a knife or a refund but Paulo has serious issues (not just the legal ones) he needs to address. The guy can't ever admit he's wrong or that he messed up, he just kept over promising everything to everyone and digging himself deeper and deeper.