A Texas federal judge has issued a bench warrant against former state Sen. Dave Schmidt and another accomplice for an initial coin offering (ICO) scam on Tuesday.
The order was passed as the Securities and Exchange Commission (SEC) moved against the former Washington state senator and two Florida residents – Robert Dunlap and Nicole Bowdler – for illegally profiting from defrauding customers with an ICO that raised $4.3 million through soliciting investors from the US and abroad.
The fraudulent project promised the investors that the Meta 1 coins were backed by “$1 billion in fine art or $2 billion of gold holdings,” however, in reality, none of these tokens even exist.
The bench warrant was only passed against Schmidt and Dunlap as they failed to appear before the judge in a hearing arranged via video conferencing due to the COVID-19 restrictions.
The third defendant was only given a final opportunity to comply with the court by Friday.
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A shady senator with previous allegations as well
Notably, the SEC froze all accounts of the fraudulent ICO last month, bringing charges of fraud against the promoters.
The previous order by the SEC mentioned that Meta 1 Coin amounted to selling securities without filing a registration or qualifying for a registration exemption.
The regulatory agency now wants penalties, disgorgement of ill-gotten gains, and permanent injunctions, although there is no guarantee for paying back victims.
The judge issued an arrest warrant as he believes that a fine on the defendants would “neither be especially burdensome nor particularly effective.”
“If incarcerated, Dunlap and Schmidt will be unable to continue Meta 1’s operations, create marketing videos, or email their putative investors,” the order stated.
Meanwhile, celebrities like Steven Seagal were also charged for their involvement and promoting fraudulent ICO projects.