Misappropriation by the SPAC CFO Cooper J. Morgenthau Highlights the Importance of Internal Controls
Cooper J. Morgenthau, the former chief financial officer (CFO) of African Gold Acquisition Corp., also known as a special purpose acquisition company (SPAC), was charged with fraud today by the Securities and Exchange Commission (SEC) for his role in orchestrating a scheme in which he stole more than $5 million from the company as well as from investors in two other SPACs that he incorporated. The SEC made the announcement today.
According to the complaint filed by the SEC, Morgenthau misappropriated funds from African Gold and stole money from another SPAC series called Strategic Metals Acquisition Corp. I and II between June 2021 and July 2022. He used these funds to pay for his personal expenses and to trade in crypto assets and other securities.
According to the complaint filed by the SEC, Mr. Cooper hid unauthorized withdrawals from African Gold’s bank account by falsifying the bank account statements. After that, Morgenthau allegedly provided the falsified documents to African Gold’s auditor and accountants so that they could prepare SEC filings for African Gold using the false information.
Morgenthau raised money from Strategic Metals‘ investors during the same general time period on the basis of misrepresentations that the money would be used to launch the Strategic Metals SPACs. In reality, Morgenthau misappropriated the money for personal uses, including to conceal his embezzlement of African Gold’s funds.
According to John T. Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office, “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.
“Our complaint against Morgenthau demonstrates our commitment to holding individuals accountable,” “Our enforcement team worked quickly 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,” said the spokesperson for the company. “These results should serve as a deterrent.”
The Securities and Exchange Commission (SEC) has filed a complaint in the United States District Court for the Southern District of New York, alleging that Morgenthau violated antifraud provisions of federal securities laws, lied to African Gold’s auditor and accountants in violation of the Securities Exchange Act of 1934, knowingly falsified African Gold’s books and records, and filed false certifications with the SEC. The complaint also alleges that Morgenthau filed false certifications with the SEC.
Morgenthau agreed to a judgment that would prohibit him from serving as an officer or director of a publicly traded company and enjoin him from committing any further violations of federal securities laws. The amount of any monetary penalties would be determined at a later time. Morgenthau also consented to the judgment.
In a separate but related development, the United States Attorney’s Office for the Southern District of New York announced today that criminal charges will be brought against Morgenthau.
Anne Hancock, David D’Addio, Ryan Murphy, and Amy Gwazda of the Boston Regional Office are in charge of the investigation at this point in time. The Securities and Exchange Commission is grateful to the United States Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation for their assistance in this investigation.
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