Former SPAC CFO charged with orchestrating $5 million fraud scheme

On Behalf of | Jan 17, 2023 | Regulatory Investigations

The former chief financial officer of a special purpose acquisition company (SPAC) has been charged with stealing millions from the firm through a fraud scheme, the Securities and Exchange Commission announced.

The SEC filed charges against Cooper J. Morgenthau, the former CFO of African Gold Acquisition Corp., over the alleged violations that spanned the period from June 2021 to July 2022.

According to the SEC’s complaint filed in federal court for the Southern District of New York, Morgenthau embezzled over $5 million from African Gold and stole funds from another SPAC series called Strategic Metals Acquisition Corp. I and II. He is accused of using the money to pay for his personal expenses and to trade in crypto assets and other securities.

Investigators found that Morgenthau made unauthorized withdrawals from African Gold’s bank account and concealed them with falsified documents that he provided to the company’s auditor and accountants for preparing African Gold’s filings with the SEC. During that time, he also allegedly raised money from Strategic Metals’ investors based on misrepresentations that the money would be used to launch the Strategic Metals SPACs, when he actually diverted the money for his personal use, including hiding his embezzlement from African Gold.

“Our complaint against Morgenthau demonstrates our commitment to holding individuals accountable, particularly when they seek to take advantage of public interest in investment vehicles such as SPACs,” said John T. Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “Our enforcement team worked swiftly and efficiently to file today’s action in just over four months since it was disclosed, which should serve to deter future bad actors in the SPAC market.”

Morgenthau is charged with violating antifraud provisions of the federal securities laws, lying to African Gold’s auditor and accountants in violation of the Securities Exchange Act of 1934, knowingly falsifying African Gold’s books and records, and filing false certifications with the SEC.

The SEC said he consented to a judgment enjoining him from further violations of federal securities laws and barring him from serving as an officer or director of a publicly traded company. Financial remedies in the case are yet to be determined.

Criminal charges were also announced against Morgenthau in a separate parallel action by the U.S. Attorney’s Office for the Southern District of New York.

The attorneys at Lewitas Hyman include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. If your firm is facing an investigation from a regulatory agency, please contact us at (844) 651-2641 or through our online contact form.

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