Washington D.C., March 20, 2020 —The Securities and Exchange Commission today announced that it has obtained an asset freeze and other emergency relief to halt an ongoing securities fraud which is based on digital asset scam perpetrated by a former state senator and two others who bilked investors in and outside the U.S.
The SEC’s complaint alleges that Florida residents Robert Dunlap and Nicole Bowdler worked with former Washington state senator David Schmidt to market and sell a purported digital asset called the “Meta 1 Coin” in an unregistered securities offering conducted through the Meta 1 Coin Trust. The complaint alleges 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, and that an accounting firm was auditing the gold assets. The defendants also allegedly told investors that the Meta 1 Coin was risk-free, would never lose value and could return up to 224,923%. According to the complaint, the defendants never distributed the Meta 1 Coins and instead used investor funds to pay personal expenses and funnel proceeds to two others, 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. In all, the complaint alleges the defendants raised more than $4.3 million from more than 150 investors in and outside the U.S.
“As we allege, the defendants made audacious claims about the Meta 1 Coin and would say almost anything to separate investors from their money,” said David Peavler, Regional Director of the SEC’s Fort Worth Regional Office. “Investors should always look skeptically at promoters who claim that their investment cannot lose value or that investors will receive massive returns.”
The SEC’s complaint, filed in the Western District of Texas (Austin Division) on March 16, 2020, and unsealed today, 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.
The SEC’s investigation was conducted by Christopher Reynolds and Carol Hahn, and supervised by Jim Etri, B. David Fraser, and Eric Werner. The litigation is being conducted by Jennifer Reece.