Cooper Morgenthau, former CFO of African Gold Acquisition Corp. (AGAC) and Strategic Metals Acquisition Corp. (SMAC), was sentenced in late April to 36 months in prison for embezzling more than $5 million from the SPACS. Morgenthau pleaded guilty to one count of wire fraud in January. Along with his prison sentence, he will have to forfeit $5.1 million and pay an additional $5.1 million in restitution.
Morgenthau stole the money from AGAC shortly after its IPO, and from SMAC as it was fundraising for an IPO, according to prosecutors. Morgenthau ultimately lost almost all the embezzled money buying and trading meme stocks and cryptocurrency, according to prosecutors. Morgenthau also falsified bank records, lied to auditors, and improperly transferred money between the two companies to hide his theft.
“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,” US Attorney Damian Williams said in a statement.
In February 2023, the SEC charged AGAC with “internal controls, reporting, and recordkeeping violations” for giving Morgenthau “control over nearly all aspects of its operating bank account and financial reporting process with little to no oversight.” Those internal control failures allowed Morgenthau to “make unauthorized withdrawals” and “falsify bank statements”, according to the SEC.
“The fact that African Gold did not discover the misappropriation of its funds for more than a year, when certain vendors refused to provide further services due to unpaid invoices, clearly indicates that the company neglected to comply with basic internal control requirements,” John T. Dugan, associate director for enforcement in the SEC’s Boston Regional Office, said in a statement.—DA
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