The greed for crypto and money can be dangerous. A former top company executive realized just that and now he’s facing time behind bars.
An ex-chief financial officer of several special purpose acquisition companies (SPACs) was given a three-year prison term on Friday for theft and forfeiting the funds he stole from businesses that traded meme stocks and cryptocurrencies.
The previous CFO of African Gold Acquisition Corporation, Cooper Morgenthau, embezzled more than $5 million from the company.
According to a news release with the US Department of Justice on April 27, he also embezzled money from two additional companies, the Strategic Metals Acquisition Corporation I (SMAC I) and the Strategic Metals Acquisition Corporation II.
In January, Florida’s Fernandina Beach resident Morgenthau, 36, entered a guilty plea to one count of wire fraud.
crypto Obsession Turns Out To Be A Nightmare For Ex-CFO
According to the authorities, Morgenthau stole more than $1.2 million from African Gold Acquisition Corp between June 2021 and August 2022, covered up the theft by fabricating the company’s account records, and either spent the entire amount in crypto and securities trading or lost it all.
In a federal courtroom in Manhattan, US District Judge Paul Engelmayer sentenced Morgenthau. He also consented to pay an equal amount in restitution and forfeit $5.11 million in earnings from the scheme.
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
The former corporate executive transferred the money from African Gold to his personal accounts, according to a related civil lawsuit from the US Securities and Exchange Commission. He then used the funds to trade equities and options of cryptocurrencies and so-called meme stocks.
African Gold, a New York-based company, raised $414 million in an IPO in February 2021. The withdrawals were uncovered in August of last year, at which point the company fired Morgenthau and reported his irregularities to the SEC.
Fraud In The SPAC Industry
SPACs are now a common trend in the finance industry. But there has also been an increase in market fraud as a result of the popularity of SPACs.
Because SPAC transactions frequently lack regulatory oversight and due diligence, fraudsters may use this as an opportunity to deceive investors and make untrue statements about the target company’s financial performance.
Additionally, some SPAC sponsors may engage in insider trading or other forms of stock market manipulation, which would result in losses for regular investors.
crypto total market cap barely unchanged at $1.15 trillion. Chart from TradingView.com.
Clear Message To Wall Street
The punishment of Morgenthau was highlighted by US Attorney Damian Williams, who claimed that it delivered a crystal-clear message to Wall Street and SPAC proponents:
“Fraud in the SPAC markets will be punished, and Wall Street greed will face severe repercussions.”
Given Morgenthau’s admission of guilt, federal prosecutors in Manhattan recommended a sentence of less than six years in prison.
The best option for Morgenthau to make money to pay restitution, according to his attorneys, was probation.
-Featured image from Financial Times
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