NEW YORK: A former chief financial officer of multiple special purpose acquisition companies (SPACs) was sentenced to three years in prison on Thursday for embezzling more than $5 million from them, and losing almost all of it trading meme stocks and cryptocurrencies.
Cooper Morgenthau, 36, of Fernandina Beach, Florida,pleaded guilty to one count of wire fraud in January.
He was sentenced by U.S. District Judge Paul Engelmayer in Manhattan Federal Court. Morgenthau also agreed to forfeit $5.11 million in money earned from the scheme and pay an equal amount in restitution. He previously settled related U.S. Securities and Exchange Commission civil charges.
Authorities said that between June 2021 and August 2022, Morgenthau stole more than $1.2 million from African Gold Acquisition Corp (AGAC.N), concealed the theft by falsifying its account statements, and spent or lost all of it in securities trading.
To cover his losses, Morgenthau then raised $4.7 million from investors in a SPAC known as Strategic Metals Acquisition Corp., only to lose most of it through crypto trading, the SEC said.
African Gold, which is based in New York and was created to buy a gold mining business, had raised $414 million in a Feb. 2021 initial public offering. It fired Morgenthau last August after he ran out of money and vendors refused to work for the company, the SEC said.
African Gold said at the time it terminated Morgenthau after learning about his “improper withdrawals” and attempts to conceal them.
Federal prosecutors in Manhattan recommended a prison term shorter than six years, citing Morgenthau’s acceptance of responsibility. Morgenthau’s lawyers sought probation, saying it was the best way for him to earn money to pay restitution. ‑‑Reuters