Ex-state senator in US hit with arrest warrant
A man who formerly served as a state senator in the US state of Washington has had an arrest warrant placed on him by a judge.
Back in 2018, David Schmidt joined a project called Meta 1 Coin as a member of the board.
However, the Securities and Exchange Commission (SEC) revealed earlier this year that it was placing an asset freeze against the firm in an attempt to stop its operations.
It said it believed that the institution was in fact a form of securities fraud related to cryptocurrencies.
Now, Schmidt and another man, Robert Dunlap, have been issued with bench warrants by a federal judge in the US state of Texas.
This is understood to be due to them failing to attend a previously scheduled hearing.
US District Judge Robert Pitman issued the warrants after Dunlap and Schmidt failed to present themselves to the court over video conference and telephone connections, which were in place because of the coronavirus pandemic.
His reasoning for the issuing of the arrest warrant was that “if incarcerated, Dunlap and Schmidt will be unable to continue Meta 1’s operations, create marketing videos, or email their putative investors”.
He was also quoted as explaining why he was not choosing to opt for a fine.
“They have obtained millions of dollars in revenue from putative investors, so they are likely able to pay a reasonable fine”, the judge said.
“But they cannot, in the wake of the court’s asset freeze order. As a result, a fine would, curiously, neither be especially burdensome nor particularly effective.”
At the time of the SEC’s decision to release the emergency order last month, the regulator went into more detail about the nature of the alleged scam.
It explained that traders were told that they could make returns on their investments of up to six figures in percentage terms.
It also touched on how the defendants claimed that the coin’s value was supported by expensive art.
“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”, it said.
“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%”, it added.
David Peavler, who serves as the Regional Director of the SEC’s Fort Worth Regional Office, accused those allegedly involved – including Schmidt – to have made “audacious” claims.
“As we allege, the defendants made audacious claims about the Meta 1 Coin and would say almost anything to separate investors from their money”, he said.
“Investors should always look skeptically at promoters who claim that their investment cannot lose value or that investors will receive massive returns”, he added.