Former SPAC exec pleads guilty to defrauding people of $5 million to trade crypto and meme stocks

• The former chief financial officer for two SPACs pleaded guilty to wire fraud, the DOJ said Wednesday.
• Cooper Morgenthau was charged with embezzling $5 million to trade crypto and meme stocks.

The former head of two special purpose acquisition companies pleaded guilty on Wednesday to charges of wire fraud in the embezzling of $5 million, according to a press release from the Department of Justice's office in the southern district of New York.

Cooper Morgenthau used the funds to trade cryptocurrencies and meme stocks and later falsified bank statements to hide his losses of nearly the entire sum. The scheme lasted roughly one year, starting in June of 2021. Morgenthau was the chief financial officer of the two SPACs, African Gold and Strategic Metals Acquisition Corp according to an SEC complaint.

"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," John T. Dugan, Associate Director for Enforcement in the SEC's Boston Regional Office said in a statement.

One of the SPACs had just completed its initial public offering, while the second blank-check firm was in the middle of a second round of fundraising from investors with the goal of going public. Morgenthau made false statements to the SEC in regards to the first SPAC's IPO filing, and also transferred funds from the second firm in order to cover some of his losses.

Wire fraud carries a maximum penalty of 20 years in prison, and Morgenthau agreed to make restitution on $5,111,335. He is set to face sentencing in mid April.