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Ex-CFO Sentenced 3 Years in Prison for Stealing from SPACs to Trade Meme Stocks, Crypto

AA News - Chayanika Deka 2023-04-30 01:30

The United States Department of Justice notified that the former chief financial officer of a special purpose acquisition company (SPAC) was sentenced to three years in prison after embezzling $5 million.

The exec used to trade cryptocurrencies and “meme stocks” with the stolen funds.

  • According to the official press release, US District Judge Paul A. Engelmayer imposed a sentence of 36 months in prison for the former chief financial officer of African Gold Acquisition Corporation (AGAC), Cooper Morgenthau, who embezzled over $5 million from three different SPACs: AGAC, Strategic Metals Acquisition Corporation I (SMAC I), and Strategic Metals Acquisition Corporation II between June 2021 and August 2022.
  • The funds were then used to trade equities and options of “meme stocks” and cryptocurrencies.
  • Morgenthau lost almost all of the money that he stole. The former exec forged bank statements to conceal and facilitate his embezzlement from AGAC, which he provided to the company’s accountant and auditor.
  • The authorities said his actions led to “material misstatements” in AGAC’s public filings with the Securities and Exchange Commission (SEC).
  • The 36-year-old Florida resident raised another $4.7 million from private investors in a SPAC separate from African Gold.
  • He fraudulently claimed that the money would be used to launch yet another SPAC. The new capital injunction was then used to cover his losses at African Gold as well as to continue his crypto and meme-stocks trading.

US Attorney Damian Williams stated,

“With today’s sentencing of Cooper Morgenthau, SPAC promoters have been sent a message that fraud in the SPAC markets will be punished, and greed on Wall Street will be met with serious consequences.”

  • The former exec previously pled guilty to one count of wire fraud. In addition to his prison term, Morgenthau was also ordered to forfeit over $5.1 million and to pay restitution of the same amount.

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