Robert P. Dunlap and David A. Schmidt, two of the individuals behind “Meta 1 Coin”, have shown contumacious disregard of the Court’s lawful orders, Judge Robert Pitman finds.
Judge Robert Pitman of the Texas Western District Court has agreed with the United States Securities and Exchange Commission (SEC) that additional conditions should be imposed on individuals behind the “Meta 1 Coin” scam as a part of the civil contempt order against them.
On April 21, 2020, the Court issued an order finding Robert P. Dunlap, individually and d/b/a Clear International Trust, and former Washington state senator David A. Schmidt in civil contempt. The Court stated that Dunlap and Schmidt could purge their contempt status “when they provide proof that they have complied with the Court’s orders”. In addition to requiring Dunlap and Schmidt to provide a sworn accounting of assets, the Court’s orders broadly prohibited them from making false and misleading statements to Meta 1 investors and marketing, offering, purchasing, or selling securities in the form of the Meta 1 Coin.
As FinanceFeeds has reported, the SEC has requested that the Court amends civil contempt conditions. The essence of the SEC’s motion is to ask the Court to order the defendants to “cease and desist from posting content to YouTube, Facebook, or any social media,” and to “remove all content currently posted, that: (1) markets, offers, or attempts to sell the Meta 1 Coin; or (2) that makes false or misleading statements, including the statement that Meta1 owns $1 billion of art, gold mines or gold bars, or other assets in amounts sufficient to repay the Meta1 investors.”
The SEC explains that the defendants continue to regularly post videos to their YouTube channel on a near-daily basis, “all of which are publicly available worldwide. While the content varies, all of the videos either market the Coin, offer it for sale, or contain false and/or misleading statements about the nature of the investment.”
Defendants have also repeatedly sent their newsletter to their list of email subscribers, continuing to market the Meta 1 Coin and discuss details of this case. The videos and newsletter emails also impugn the ethics of the SEC’s counsel and state that they are being “criminally prosecuted,” as well as “make false statements to investors that Meta1 owns the art and the gold that supposedly backs the Meta 1 Coin, that an SEC witness ‘is in the process of being a convicted felon and is now on the run from the FBI,’ and that a ‘higher court’ is taking action on this case.”
The SEC further represents that it “has spoken with at least two investors recently who have expressed that ‘they don’t know who to believe’ because the information they are receiving from Meta1 and its spokespersons contradicts what they are reading in the Court pleadings.”
The Court’s order, issued on May 5, 2020, finds that the SEC’s request to add a condition to Dunlap and Schmidt’s civil contempt is entirely justified. The supplemental request to order Dunlap and Schmidt to cease publishing videos and email newsletters that market the Meta 1 Coin is entirely consistent with the Court’s previous orders, the Judge concludes.
“Defendants’ continued conduct, in spite of express instructions to the contrary, has harmed the very interest in protecting investors and the public that the Court’s orders were meant to protect”, Judge Pitman says.
“From all appearances, Defendants will carry on, further harming investors and the public. In this respect, and in those that the Court has previously detailed, their contumacious disregard of the Court’s lawful orders is intolerable”, Judge Pitman explained. .
In addition to complying with the Court’s previous orders, to be released from coercive incarceration, Dunlap and Schmidt must provide proof that they have ceased and desisted from posting content to YouTube, Facebook, their email newsletters, or any social media platform or website whatsoever and have removed all content currently available to investors and the public, that: (1) markets, offers, or attempts to sell the Meta 1 Coin; or (2) that makes false or misleading statements, including but not limited to the statement that Meta1 owns $1 billion of art, gold mines or gold bars, or other assets in amounts sufficient to repay the Meta1 investors.