Ex-CFO that stole $5M to trade crypto and ‘meme stocks’ gets 3 years prison

The former CFO of a special purpose acquisition company (SPAC) has been sentenced to three years in prison after he embezzled $5 million that was used to trade cryptocurrencies and “memetic stocks.”

Press on April 27 release Cooper Morgenthau, former CFO of African Gold Acquisition Corp. (AGAC), has announced that it has raised $500 from three different SPACs: AGAC, Strategic Metals Acquisition Corp I (SMAC I), and Strategic Metals, according to a statement from the Department of Justice (DOJ). He is said to have embezzled over $10,000. Acquisition Corp II (SMAC II) from June 2021 to August 2022.

Former chief financial officer of two SPACs sentenced to 36 months in prison for fraud schemehttps://t.co/ZOvi2ksEi1

— U.S. Attorney SDNY (@SDNYnews) April 27, 2023

According to the civil affairs concerned Complaint Morgenthau wire-transfers approximately $1.2 million in funds from the U.S. Securities and Exchange Commission (SEC) from African Gold to his personal account and uses the funds to trade stocks and cryptocurrency options, so-called meme stocks. Did.

In doing so, he lost almost all his funds.

Following the loss, he subsequently provided forged documents to accountants and African Gold’s auditors in advance of public filings with the SEC that resulted in a “material misrepresentation” in the company’s public financial records. .

Meanwhile, Morgenthau raised another $4.7 million from private investors in a SPAC separate from African Gold based on fraudulent claims that the funds would be used to launch yet another SPAC.

Unfortunately for investors, Morgenthau actually used the freshly raised money not only to cover his losses in African Gold, but also to continue trading cryptocurrencies and memetic stocks.

At that time, SMAC I was in the process of raising funds from private investors prior to its initial public offering (IPO).

African Gold discovered the withdrawal in August 2022, fired Morgenthau and notified the SEC of his wrongdoing.

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Morgenthau, a Florida resident, pleaded guilty to one count of wire fraud on January 3. He was ordered to pay $5.1 million in forfeiture and an additional $5.1 million in restitution on top of his three-year prison sentence.

“Today’s Cooper Morgenthau ruling sends a message to SPAC promoters that fraud in the SPAC market will be punished and greed on Wall Street will face serious consequences,” said U.S. Attorney Damien Williams. said in a statement.

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