Prisoner behind bars sitting on the floor

SPAC ex-CFO gets 3 years in prison over $5M stolen for meme stocks, digital assets trading

A man who is charged with stealing $5 million from two companies to trade digital assets and meme stocks has been sentenced to three years behind bars.

Cooper Morgenthau, a former chief financial officer for three special purpose acquisition companies (SPACs), was sentenced to 36 months in prison for committing wire fraud.

Morgenthau was the CFO of African Gold Acquisition Corp. (AGAC) and Strategic Metals Acquisition Corp. (SMAC). The former held its initial public offering in February 2021, raising $414 million, while the latter was raising money from investors in preparation for its IPO.

Between June 2021 and August 2022, Morgenthau reportedly embezzled over $1.2 million from AGAC to trade equities and options of meme stocks and digital assets. He lost all the stolen money, the Justice Department says. He raised $4.7 million through SMAC to cover his tracks, using some to refund AGAC and the rest to trade the meme stocks.

To conceal his fraud, he fabricated financial documents and bank statements that he provided to the two SPACs’ auditors. The 37-year-old Florida native pleaded guilty to one count of wire fraud in January.

In addition to his sentencing, U.S. District Judge Paul A. Engelmayer also ordered Morgenthau to forfeit $5.1 million and pay an equal amount 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 serious consequences,” commented Damian Williams, the U.S. Attorney for the Southern District of New York.

Morgenthau’s fraud was first discovered by AGAC last August, and the company promptly fired him and reported him to the SEC.

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