The US Attorney for the Southern District of New York has announced that the former CFO of two special purpose acquisition companies (SPACs), Cooper Morgenthau, has been sentenced to 36 months in prison for embezzlement and wire fraud up to the tune of $5 million.

The defendant allegedly used the money to trade cryptocurrency and meme stocks, a statement announcing the sentence on the Department of Justice’s website asserted.

Cooper Morgenthau was formerly the CFO of African Gold Acquisition Group (AGAC) and Strategic Metal Acquisition Corp (SMAC), a position that enabled him to perpetrate the crimes.

Per a related civil complaint by the SEC, Morgenthau allegedly transferred $1.2 million to his account from AGAC’s coffers. He also raised another $4.7 million through SMAC, promising to create another SPAC with the money.

Fabricated bank statements

According to the Department of Justice’s press release, Cooper Morgenthau fabricated bank statements and provided them to AGAC’s auditor, leading to misstatements in the firm’s SEC filings.

During prosecution, Mr. Cooper Morgenthau pleaded guilty to one count of wire fraud and got a three-year prison sentence. Also, the court ordered him to forfeit approximately $5.1 million while fining him the same amount for restitution.

A new warning from DoJ

In the statement, the Department of Justice warned against using SPACs to commit fraud, declaring that offenders will never go unpunished.

“With today’s sentencing of Cooper Morgenthau, SPAC promoters have been sent a message that fraud in the SPAC markets will be punished,” Attorney Damian Williams said in the announcement.

African Gold Acquisition Group (AGAC) fired Morgenthau in August 2022 after the misstatements in the SEC filings exposed the ex-CFO’s unauthorized withdrawals. The SPAC also notified the SEC of his misconduct, marking the beginning of his travails with federal investigators resulting in the 36-month jail term.