The Downfall of Cooper Morgenthau: How Embezzlement and Meme Coin Trading Led to Prison Time

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Cooper Morgenthau, the former Chief Financial Officer (CFO) of African Gold Acquisition Corporation (AGAC), a Special Purpose Acquisition Company (SPAC), orchestrated an elaborate embezzlement scheme that ultimately led to his downfall. He misappropriated $5 million from three different SPACs and squandered most funds trading in cryptocurrencies and “meme stocks.”

Sentenced to Three Years After Meme Coin Trading Spree

On April 27, the United States Department of Justice announced that Cooper Morgenthau was sentenced to three years for his fraudulent activities. The ex-CFO of AGAC embezzled more than $5 million from AGAC, Strategic Metals Acquisition Corporation I (SMAC I), and Strategic Metals Acquisition Corporation II between June 2021 and August 2022.

The U.S. Securities and Exchange Commission (SEC) filed a related civil complaint revealing that Morgenthau transferred around $1.2 million from African Gold to his accounts. He then used the funds to trade equities and options in cryptocurrencies and meme stocks, eventually losing the money.

Cooper Morgenthau Falsified Documents

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Morgenthau submitted falsified documents to African Gold’s accountants and auditors before the company’s public filing with the SEC to cover up his losses. These false records led to material misstatements in African Gold’s public financial documents.

As his deception continued, Morgenthau raised an additional $4.7 million from private investors through a separate SPAC, falsely claiming that the funds would be used to launch another SPAC. Instead, he used the newly acquired capital to cover his losses at African Gold and engage in more high-risk trading of cryptocurrencies and meme stocks.

In August 2022, African Gold discovered Morgenthau’s unauthorized withdrawals and promptly fired him, reporting his misconduct to the SEC. A Florida resident, Morgenthau pled guilty to one count of wire fraud on January 3. Alongside his three-year prison sentence, he was ordered to forfeit $5.1 million and pay an additional $5.1 million in restitution.

A Stark Warning to Wall Street

U.S. Attorney Damian Williams emphasized the significance of Morgenthau’s sentencing, stating that it sends a clear message to SPAC promoters and Wall Street: “Fraud in the SPAC markets will be punished, and greed on Wall Street will be met with serious consequences.”

The case of Cooper Morgenthau serves as a cautionary tale for the financial industry, highlighting the importance of transparency, integrity, and the consequences of fraudulent behavior.

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