Former CFO who stole $5 million to trade crypto and “meme stocks” gets 3 years in prison
The former CFO of a private equity firm (SPAC) was sentenced to three years in prison after embezzling $5 million, which he used to trade cryptocurrencies and “meme stocks.”
A US Department of Justice press release on April 27 said Cooper Morgenthau, former CFO of the African Gold Acquisition Corporation (AGAC), embezzled more than $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.
According to a related civil complaint by the US Securities and Exchange Commission (SEC), Morgenthau transferred approximately $1.2 million in funds from African Gold to his personal accounts, and used the money to trade stocks and options of cryptocurrencies and so-called meme stocks .
In doing so, he lost almost all of his funds.
After the losses, he provided falsified documents to accountants and an auditor at African Gold before its public filing with the SEC, leading to “material misstatements” 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 the fraudulent claim that the money would be used to launch yet another SPAC.
Unfortunately for investors, Morgenthau used the newly raised capital to cover his losses on African Gold and continue further trading in cryptocurrencies and meme stocks.
At the time, SMAC I was in the process of raising money from private investors ahead of its initial public offering (IPO).
African Gold discovered the withdrawals in August 2022, fired Morgenthau and informed the SEC of his misconduct.
Related: CTFC wins record $3.4 billion fee in Bitcoin-related fraud case
Morgenthau, a Florida resident, pleaded guilty to one count of wire fraud on Jan. 3. In addition to the three-year prison term, he was also ordered to forfeit $5.1 million and pay an additional $5.1 million in restitution.
“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 severe consequences,” U.S. Attorney Damian Williams said in the statement.
Magazine: Crypto Regulation — Does SEC Chairman Gary Gensler Have the Last Word?
