The former Chief financial officer (CFO) of a Special purpose acquisition company (SPAC) was sentenced to three years in prison for embezzling $5M from three companies, which he used to trade cryptocurrencies and “meme stocks.”
Cooper Morgenthau, the former chief financial officer of African Gold Acquisition Corporation (AGAC), stole more than $5 million from AGAC, Strategic Metals Acquisition Corporation I (SMAC I), and Strategic Metals Acquisition Corporation II between June 2021 and August 2022, according to a press release issued by the United States Department of Justice on April 27.
According to a civil complaint from the U.S. Securities and Exchange Commission (SEC), Morgenthau transferred approximately $1.2 million from African Gold to his accounts and used the funds to trade equities, options, and so-called meme stocks. Consequently, he lost nearly all of the money.
After the losses, he provided falsified documents to accountants and an auditor at African Gold before the company’s SEC filing, resulting in “material misstatements” in the company’s public financial records.
In the meantime, Morgenthau raised an additional $4.7 million from private investors in a separate SPAC from African Gold by falsely claiming that the funds would be used to establish yet another SPAC.
Morgenthau used the newly-raised capital to cover his losses at African Gold and to continue trading cryptocurrencies and meme stocks.
Before its initial public offering, SMAC I was in the process of raising funds from private investors. African Gold discovered the withdrawals in August 2022, terminated Morgenthau, and reported his misconduct to the SEC.
On January 3, Florida resident Morgenthau pleaded guilty to one count of wire fraud. In addition to his three-year prison sentence, he was ordered to forfeit $5,1,000,000 and pay $5,1,000,000 in restitution.
Cooper Morgenthau’s sentencing today sends a message to SPAC promoters that fraud in the SPAC markets will be punished, and Wall Street avarice will have severe consequences, U.S. Attorney Damien Williams said in a statement.
