By George Ward
Despite the current crypto bear market continuing, it’s not just investors who are losing money. There has also been a rise in criminal activities, including platform hacking and fund misappropriation.
Recently, a former accounting executive of two SPACs confessed in court to stealing over $5 million to invest in meme stocks and cryptocurrencies. Damian Williams, a US Attorney for the Southern District of New York, today announced that Morgenthau, a former Chief Financial Officer of SPAC-1 and SPAC-2, has pleaded guilty to one count of wire fraud in connection with an embezzlement scheme involving $5 million.
The defendant accepted the plea in front of Judge Paul A. Engelmayer. Damian Williams, the US Attorney, stated that Cooper Morgenthau, a former accounting executive of two SPACs, admitted to violating the trust of the public and private investors. His action embezzled millions of dollars to trade meme stocks and cryptos.
The Attorney’s Office is committed to uncovering any fraudulent activity within the Special Purpose Acquisition Company (SPAC) market to protect the average investor from the misconduct of Wall Street. Also, the Office is determined to find fraud in the SPAC market and to secure Main Street investors from Wall Street’s misdeeds.
Part of the statements made in court proceedings read, Cooper Morgenthau, ACCOUNTING EXECUTIVE of both SPAC-1 and SPAC-2, is accused of inappropriately taking more than $5 million from June 2021 to August 2022. SPAC-1 had gone public, while SPAC-2 was collecting money from private investors ahead of its anticipated IPO.
The accused reportedly invested the illegally procured funds in equities and options of meme stocks and cryptocurrencies, eventually losing almost all the stolen money. Morgenthau created false bank statements to hide and make it easier for him to steal from SPAC-1 and colluded with SPAC-1’s accountant and auditor to perpetrate the crime.
An Admission Of Guilt
Morgenthau, a 35-year-old man from Fernandina Beach, Florida, has taken responsibility for his alleged wire fraud charge, potentially earning him up to 20 years in prison. He admitted to fabricating documents for SPAC-1 and diverting funds from SPAC-2 to SPAC-1 to conceal his theft from SPAC-1.
Morgenthau agreed to surrender $5,111,335 and pay back $5,111,335 as part of his plea agreement. Even though Congress sets the statutory maximum sentence for this charge, Judge Engelmayer will determine the final sentence imposed on Morgenthau on April 25, 2023.
Williams expressed his admiration for the remarkable work of the Federal Bureau of Investigation (FBI). He appreciated the assistance and coordination provided by the Securities and Exchange Commission (SEC).
This case warns all financial professionals and investors that they must be aware of the risks of cryptocurrency trading and exercise due diligence when investing in it. It is also a reminder that companies should have strong internal controls to protect themselves from similar misappropriations.