The Securities and Exchange Commission (SEC) has shut down an alleged “ongoing securities fraud” orchestrated by former Washington state Senator David Schmidt along with two Florida residents, Nicole Bowdler and Robert Dunlap – who was doing business as Clear International Trust. The SEC said that is has obtained an asset freeze revolving around a crypto called Meta 1 Coin, said to be an asset-backed digital asset, conducted via Meta 1 Coin Trust.
In all, the complaint alleges the defendants raised more than $4.3 million from more than 150 investors in and outside the U.S.
The SEC complaint claims that the defendants made numerous false and misleading statements to potential and actual investors, including claims that the Meta 1 Coin was backed by a $1 billion art collection or $2 billion of gold. Allegedly it was claimed that an accounting firm was auditing the gold assets.
The SEC claims that the defendants told investors that Meta 1 coin was “risk free” and each coin, sold for either $22.22 or $44.44, would in two years be worth $50,000—up to a 224,923% return—as a “very conservative value.”
The Meta 1 Coins were never distributed and the defendants were said to have used investor money to pay personal expenses, buy luxury cars – including a Ferrari. Some of the funds were channeled to two other entities: Pramana Capital Inc. and Peter K. Shamoun.
The complaint alleges that some of the investor funds were used to buy luxury automobiles, including a $215,000 Ferrari.
The SEC complaint alleges that Bowdler claimed to use her “psychic expertise” to provide investment guidance to listeners who share her beliefs, encouraging them to invest in Meta1.
Schmidt served in the Washington State Legislature from 1994 to 2006, first as a state representative and then as a state senator, according to the SEC. On March 20, 2012, the Public Disclosure Commission of the State of Washington found (and Schmidt stipulated) that Schmidt improperly reimbursed himself from campaign funds for wages he claimed to have lost and improperly used campaign funds for personal use, among other findings. Schmidt was ordered to pay a civil penalty of $10,000.
The SEC’s complaint, filed in the Western District of Texas (Austin Division) on March 16, 2020, and unsealed on March 20, 2020, charges the Meta 1 Coin Trust, Dunlap, Bowdler, and Schmidt with violating antifraud and securities registration provisions of the federal securities laws.
The SEC seeks permanent and conduct-based injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and civil penalties against the defendants. The complaint also charges Pramana and Shamoun as relief defendants and seeks disgorgement of allegedly ill-gotten gains with prejudgment interest.
SEC v. Metal 1 Trust et al comp24775