Ex-CFO pleads guilty to stealing from SPACs to trade meme stocks, cryptocurrencies

© Reuters. FILE PHOTO: Representations of cryptocurrencies Bitcoin, Ethereum and DogeCoin are placed on PC motherboard in this illustration taken, June 29, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

By Jonathan Stempel

NEW YORK (Reuters) - A former chief financial officer of multiple special purpose acquisition companies (SPACs) has pleaded guilty to embezzling more than $5 million from them, and losing almost all of it trading meme stocks and cryptocurrencies.

Cooper Morgenthau, 35, of Fernandina Beach, Florida, pleaded guilty to one count of wire fraud on Tuesday before U.S. District Judge Paul Engelmayer in Manhattan federal court.

Morgenthau faces a possible prison sentence of about six to 7-1/4 years, under recommended federal guidelines, at his scheduled April 25 sentencing.

He also agreed to forfeit $5.11 million and pay an equal amount in restitution, and settled related civil charges by the U.S. Securities and Exchange Commission.

Michael Bowen, a lawyer for Morgenthau, declined to comment.

Authorities said that between June 2021 and August 2022, Morgenthau stole more than $1.2 million from African Gold Acquisition Corp, concealed the theft by falsifying its account statements, and spent or lost all of it in securities trading.

To cover his losses, Morgenthau then raised $4.7 million from investors in SPACs known as Strategic Metals Acquisition Corp, only to lose most of it through crypto trading, the SEC said.

African Gold, which is based in New York and was created to buy a gold mining business, had raised $414 million in a Feb. 2021 initial public offering.

It fired Morgenthau last August after he ran out of money and vendors refused to work for the company, the SEC said.

African Gold said at the time it terminated Morgenthau after learning about his "improper withdrawals" and attempts to conceal them.

In pleading guilty, Morgenthau "admitted that he breached the trust that he owed to his public and private investors," U.S. Attorney Damian Williams in Manhattan said in a statement.