Judge Orders Arrest of Former GOP State Senator Involved With Crypto Scam

A federal judge in Texas issued warrants for the arrest of an ex-Washington state senator and the leaders behind an alleged cryptocurrency scam involving the Meta 1 coin. 

At an April 21 hearing with the U.S. Securities and Exchange Commission, Judge Robert Pitman ordered bench warrants for former Republican Sen. David Schmidt and cohort Robert Dunlap after they failed to appear. This was despite the fact the proceedings were being convened over video conference in light of COVID-19 prevention measures. 

Nicole Bowdler, the third defendant named in the judge’s ruling, was not targeted in a bench warrant but was given one final opportunity to comply by April 24.

SEC motion targeting crypto scammers

The arrest warrants are part of an ongoing case from the SEC regarding the Meta 1 coin, an alleged crypto scam backed by Schmidt that promised investors the coins were backed with “$1 billion in fine art or $2 billion of gold holdings” without having any actual tokens. The SEC froze the cryptocurrency’s assets on March 16 and charged the firm’s operators with fraud.

However, that apparently did not stop Schmidt and Dunlap from continuing to tout Meta 1. According to the SEC’s contempt motion, the three defendants had already raised over $4.3 million from Meta 1 “investors” and were continuing to sell the tokens. 

Arrests over fines

Judge Pitman chose an arrest warrant for Schmidt and Dunlap over a fine, citing that the latter would “neither be especially burdensome nor particularly effective” in light of the assets at their disposal:

“If incarcerated, Dunlap and Schmidt will be unable to continue Meta 1’s operations, create marketing videos, or email their putative investors."

The bench warrant to be carried out by the U.S. Marshals Service will have the crypto scammers delivered into federal custody in the Western District of Texas.

Republican senator and "Earth Angel" scammers

None of the defendants in the SEC case is a stranger to controversy. Schmidt lost a reelection campaign for his seat in Washington in 2006, after which he faced investigation for misspending over $40,000 in campaign funds. He subsequently paid a $10,000 fine.

However, despite his propensity for illicit activities, Schmidt wasn’t the origin of the purported crypto scam. That honor goes to Dunlap, who launched the Meta 1 token with Bowdler in April 2018. 

Bowdler is considered to have played a lesser role in the scheme, which may explain why Judge Pitman did not issue an arrest warrant for her like Schmidt and Dunlap. In one of the SEC’s March filings, the commission said she used some rather unique methods to attract investors in the cryptocurrency:

"Bowdler claims to use her 'psychic expertise' to provide investment guidance to listeners who share her beliefs, encouraging them to invest in Meta1. In particular, Bowdler claims to be an 'Earth Angel incarnated to help humanity,' and purports to regularly channel and commune with angels, including the mythical angel, Metatron, who frequently teaches her about 'the realities of our world.'"