Former SPAC CFO Gets 36-Month Prison Sentence for $5M Embezzlement and “Meme Stock” Losses

Former Chief Financial Officer of two special purpose acquisition companies (SPACs), Cooper Morgenthau, has been sentenced to 36 months in prison for committing wire fraud. The fraud scheme involved embezzling more than $5 million from African Gold Acquisition Corp. (AGAC) and Strategic Metals Acquisition Corp. (SMAC).

According to the allegations, Morgenthau, who served as the CFO of both SPACs, embezzled the funds between June 2021 and August 2022. He then used the embezzled money to trade equities and options of “meme stocks” and cryptocurrencies, ultimately losing almost all of the stolen funds. To cover up the embezzlement from AGAC, Morgenthau fabricated bank statements, made material misstatements in AGAC’s public filings with the Securities and Exchange Commission (SEC), and transferred some of SMAC’s funds to AGAC.

The sentencing, which was imposed by U.S. District Judge Paul A. Engelmayer, comes after Morgenthau previously pled guilty to one count of wire fraud. In addition to his prison term, he was also ordered to forfeit $5,111,335 and pay restitution of the same amount.

U.S. Attorney Damian Williams emphasized that this sentencing sends a message that fraud in the SPAC markets will be punished, and greed on Wall Street will be met with serious consequences. He praised the Federal Bureau of Investigation for their outstanding work and thanked the SEC for their assistance and cooperation in the investigation.

The case was handled by the Office’s Securities and Commodities Fraud Task Force and Money Laundering and Transnational Criminal Enterprises Unit, with Assistant U.S. Attorneys Joshua A. Naftalis and Anden Chow leading the prosecution.

This case serves as a reminder that fraudulent activity will not be tolerated in the financial markets, and those who engage in such activity will be held accountable for their actions. The sentencing of Morgenthau sends a strong message to other individuals who may be considering engaging in similar fraudulent schemes.

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