The former CFO of a special purpose acquisition company (SPAC) was sentenced to three years in prison after embezzling $5 million, which he used to trade cryptocurrencies and “meme stocks” “.
A press of April 27 release of the United States Department of Justice said that Cooper Morgenthau, the former chief financial officer of African Gold Acquisition Corporation (AGAC), had embezzled more than 5 million dollars from three different SPACs: AGAC, Strategic Metals Acquisition Corporation I (SMAC I) and Strategic Metals Acquisition. Corporation II between June 2021 and August 2022.
Former CFO of two SPACs sentenced to 36 months in prison for fraudulent schemehttps://t.co/ZOvi2ksEi1
— SDNY US Attorney (@SDNYnews) April 27, 2023
According to a related U.S. Securities and Exchange Commission (SEC) civil complaint, Morgenthau transferred approximately $1.2 million in funds from African Gold to his personal accounts, using the money to trade stocks and bonds. cryptocurrency options and so-called meme stocks.
In doing so, he lost almost all of the funds.
Following the losses, he then provided falsified documents to African Gold’s accountants and an auditor prior to its public filing with the SEC, which led to “material misstatements” in the company’s public financial records.
Meanwhile, Morgenthau raised an additional $4.7 million from private investors in a separate SPAC from African Gold, based on the fraudulent claim that the money would be used to launch another SPAC.
Unfortunately for investors, Morgenthau used the freshly raised capital to cover his losses at African Gold and continue trading cryptocurrencies and meme stocks.
At the time, SMAC I was in the process of raising funds from private investors ahead of its IPO.
African Gold discovered the withdrawals in August 2022, fired Morgenthau and notified the SEC of his malpractice.
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Florida resident Morgenthau pleaded guilty to one count of wire fraud on Jan. 3. In addition to his three-year prison sentence, he was also ordered to confiscate $5.1 million and pay an additional $5.1 million in restitution.
“With today’s sentencing of Cooper Morgenthau, SPAC promoters have received a message that fraud in SPAC markets will be punished and that greed on Wall Street will have serious consequences,” said U.S. Attorney Damian Williams. in the press release.
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