Cooper Morgenthau, the former CFO of African Gold Acquisition Corp. (AGAC), has been sentenced to three years in prison by U.S. District Judge Paul A. Engelmayer for embezzling over $5 million from two separate special purpose acquisition companies (SPACs). The other affected SPAC is Strategic Metals Acquisition Corp, according to a press release by the U.S. Department of Justice (DoJ) on April 27, 2023.
Former chief financial officer of two SPACs sentenced to 36 months in prison for fraud schemehttps://t.co/ZOvi2ksEi1
— US Attorney SDNY (@SDNYnews) April 27, 2023
Morgenthau embezzled the funds between June 2021 and August 2022. During this period, SMAC was raising funds from private investors in anticipation of its IPO, and AGAC had already completed its IPO. He transferred $1.2 million from African Gold Acquisition Corp. accounts to his personal accounts to trade cryptocurrency stocks, options, and equities.
Morgenthau also obtained an additional $4.7 million from private investors in a SPAC not affiliated with African Gold, falsely representing that the funds would be used to establish another SPAC. However, he continued trading in cryptocurrencies and meme stocks and covering his losses in African Gold. This resulted in the investors who trusted him being left at a loss.
Morgenthau allegedly lost almost all the stolen money through trading activities involving shares, options, cryptocurrencies, and meme stocks. To conceal his wrongdoing, Morgenthau created fraudulent bank statements and made material misstatements in AGAC’s public filings with the Securities and Exchange Commission (SEC). He also transferred some of SMAC’s funds to AGAC to cover the misappropriated funds.
Morgenthau previously pleaded guilty to a single count of wire fraud as the SEC filed a separate civil lawsuit against Morgenthau in January 2023. Thus, in addition to his three-year prison term, he was ordered to forfeit $5,111,335 and pay the same amount in restitution.
In a separate case involving the U.S. DoJ, Rashawn Russell, a former investment banker and registered broker, has been charged with scamming multiple investors in a Brooklyn high Court. Russell is accused of luring individuals into investing in non-existent cryptocurrencies by promising high returns and using the funds for personal purposes. The United States attorney of the Eastern District of New York, Breon Peace, will prosecute the case against Russell, according to the U.S. DoJ’s announcement.
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