The SEC alleges Dave Schmidt and two others bilked $4 million from investors who bought them.
OLYMPIA — A former Snohomish County state lawmaker is accused by federal authorities of helping scam millions of dollars from people across the country by convincing them to invest in a non-existent digital currency.
Dave Schmidt, who served 12 years in the Legislature, and a Florida couple, Robert Dunlap and Nicole Bowdler, allegedly bilked $4.4 million from investors who bought the Meta 1 Coin for $22.22 or $44.44, expecting each to be worth $50,000 within two years, according to a complaint filed March 16 by the Securities and Exchange Commission in Texas.
Since April 2018, the trio through deceptive acts and “material misrepresentation” conned 150 investors in 32 states and five foreign countries into believing the digital currency they had bought was backed either by a $1 billion art collection or $2 billion of gold.
“In reality the Coin is backed by nothing,” SEC Attorney Jennifer Reece wrote in the complaint.
The defendants never distributed the coins, instead using some of the money for personal expenses and funneling a portion to two others, Pramana Capital Inc. and Peter K. Shamoun, according to the complaint. Shamoun is alleged to have used $215,000 to buy a Ferrari.
Schmidt, a Republican, lived in Mill Creek while serving eight years in the state House, from 1994-2002, followed by four years in the Senate. In 2006, he lost his bid for re-election to Democrat Steve Hobbs. And Schmidt lost again when the two met in a rematch in 2010.
On Friday, Schmidt, who now lives in Boca Raton, Florida, denied wrongdoing.
“Absolutely, I flat-out deny them,” he said of the allegations. “I have never seen such a sloppy investigation from a professional attorney in my life. She has relied on hearsay. We have hard facts, not hearsay.”
And though he’s an active pitch man for the coins, he said, he’s not “received a single dime” from the venture. “I personally do not take money from them,” Schmidt said.
He moved to Arizona in 2012 and to Florida last year. While in Arizona, he launched an online weekly radio program. “The Sedona Connection,” renaming it “Cosmic Connections” upon moving to Florida. He described the program as informational, spiritual and motivational. Schmidt also said he travels around the country doing motivational workshops, often marketing the Meta 1 coin.
Schmidt described Dunlap as a “very accomplished international banker” who obtained the collections of art and gold as backing for the coins. He said they are continuing to take orders for them at $88.88 apiece — but they are not taking any money during the current legal proceedings.
He said Dunlap plans to post a video statement responding to the charges on the Meta 1 website Sunday. And the two men will discuss it on next week’s “Cosmic Connection” program.
This week, Schmidt blasted the federal authority on the “Cosmic Connection” web page .
“The SEC has filed charges against Meta 1 and myself alleging that we have been running a scam operation and stealing the funds from the people who have purchased coins. NOTHING COULD BE FURTHER FROM THE TRUTH!!!” he wrote.
“We did feel that at some time we would face this type of attack as the cabal would not just sit back and allow their (sic) existing system to fall apart…all is well and we are on the right track to freeing humanity from the thousands of years of financial slavery,” he wrote.
The SEC’s complaint charges Dunlap, Bowdler, Schmidt and the Meta 1 Coin Trust with fraud and violating federal securities laws. It claims the coin sales were illegal, unregistered offerings of securities.
Dunlap and Bowdler allegedly began the fraudulent scheme in April 2018 while living in Fredericksburg, Texas. Schmidt joined them in September 2018 and began extensively marketing the coin offering, the complaint states.
In the course of the investigation, the SEC subpoenaed all three of the accused. Each returned their subpoena to the SEC with the word “Fraudulent” marked on every page, according to the complaint. Schmidt refused to testify or produce documents as requested. Dunlap met with the investigator but didn’t answer questions, while Bowdler didn’t answer questions but did turn over some materials.
A U.S. District Court judge on March 16 issued a temporary restraining order to prevent further sales of the purported digital currency. A hearing on the SEC’s request for a preliminary injunction is set for April 13.