According to the SEC, Cooper Morgenthau, used his position as African Gold’s CFO to conceal unauthorized withdrawals by doctoring African Gold’s bank account statements. He then provided those fabricated statements to African Gold’s auditor and accountants assuring them that all material transactions have been properly recorded. The falsified statements were then used by the auditors and accountants to prepare African Gold’s financial statements and then its quarterly and annual SEC reports.

Because he had either spent or lost the money obtained from African Gold, Morgenthau also raised money from investors purportedly to launch another SPAC, Strategic Metals. The money raised was periodically used to conceal his embezzlement of funds from African Gold, but was then subsequently withdrawn and utilised to trade in crypto-assets. The scheme remained undetected from June 2021 to July 2022, but by August 2022 Morgenthau had “run out of money” having emptied the bank accounts of both African Gold and Strategic Metals.

“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, SEC’s Boston Regional Office

The SEC’s complaint alleges that Morgenthau violated antifraud provisions of the 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.

“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,” said John T. Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “Our enforcement team worked swiftly 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.”

One positive aspect of the case is that the vast majority of the funds raised from African Gold’s investors, approximately $414m, was placed in a trust account, which was beyond the reach of the CFO. Sadly because of Morgenthau’s role as the founder of Strategic Metals no such protection was accorded to the money of those who had invested into this fake entity. Morgenthau “withdrew money from the Strategic Metals’ bank acount on the same day that it was deposited by investors”.

Morgenthau consented to a judgment enjoining him from further federal securities laws violations and barring him from serving as an officer or director of a publicly traded company, with monetary remedies to be determined at a later date.

In a parallel action, the US Attorney’s Office for the Southern District of New York today announced criminal charges against Morgenthau.