Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 1 of 22
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`SECURITIES AND EXCHANGE COMMISSION,
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`Plaintiff,
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`v.
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`COOPER J. MORGENTHAU,
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`Defendant.
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`________________________________________________:
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`No. 23 Civ. 00022
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`JURY TRIAL
`DEMANDED
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`COMPLAINT
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`Plaintiff Securities and Exchange Commission (the “Commission”), for its Complaint
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`against defendant Cooper J. Morgenthau (“Morgenthau”), alleges as follows:
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`PRELIMINARY STATEMENT
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`From at least June 2021 through at least July 2022 (the “Relevant Period”),
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`1.
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`defendant Morgenthau stole more than $5 million from his employer, a publicly-traded special
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`purpose acquisition company (“SPAC”), and from investors in two companies that Morgenthau
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`incorporated for the purpose of becoming SPACs. Morgenthau used the stolen funds to cover his
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`personal expenses and his trading in so-called meme stocks and crypto asset securities.
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`2.
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`Morgenthau was the Chief Financial Officer of African Gold Acquisition Corp.
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`(“African Gold”), a SPAC seeking to acquire a company in the gold mining industry. During the
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`Relevant Period, Morgenthau wired more than $1.2 million of African Gold’s money to his
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`personal bank and brokerage accounts. He used the money primarily to trade options on meme
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`stocks, i.e., stocks that gained large online and social media followings among retail investors.
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 2 of 22
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`3.
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`To avoid detection, Morgenthau doctored African Gold’s monthly bank statements
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`by, for example, deleting his unauthorized transactions and overstating the available account
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`balance in any given month by as much as $1.19 million. Morgenthau then emailed these
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`fabricated bank statements to African Gold’s accountants and auditor, along with letters falsely
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`attesting that he was unaware of any fraud at African Gold and that the company had properly
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`recorded in the company’s books and records all material transactions. Morgenthau knew that
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`African Gold’s accountants and auditor would rely on his falsified bank statements and his false
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`assurances in those letters to prepare financial statements that were incorporated into African
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`Gold’s quarterly and annual reports filed with the Commission. Because of Morgenthau’s
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`fraudulent scheme, those publicly filed reports contained materially false and misleading
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`statements regarding African Gold’s financial condition and other matters. Morgenthau signed
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`those reports and attested to their accuracy in certifications filed with the Commission, while
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`knowing that the reports contained materially false and misleading information because of his own
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`fraud.
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`4.
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`Morgenthau either spent or lost through securities trading all of the money he stole
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`from African Gold. To cover his losses, Morgenthau raised money by soliciting investors to help
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`launch another series of SPACs: Strategic Metals Acquisition Corp. I and Strategic Metals
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`Acquisition Corp. II (together, “Strategic Metals”). From at least July 2021 through at least July
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`2022, Morgenthau raised approximately $4.7 million from investors in Strategic Metals, all of
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`which he misappropriated for himself.
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`5.
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`Morgenthau deposited some of the money he raised for Strategic Metals into
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`African Gold’s bank account in order to conceal his embezzlement from African Gold and its
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`accountants and auditor. For example, Morgenthau deposited more than half a million dollars of
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`2
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 3 of 22
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`Strategic Metals’ funds into African Gold’s bank account on December 31, 2021, because he knew
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`that African Gold’s auditor would confirm the account balance as of that date, in connection with
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`African Gold’s year-end audit. Almost immediately thereafter, Morgenthau began withdrawing
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`the money from African Gold’s bank account and used most of it to trade crypto asset securities.
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`Morgenthau periodically deposited just enough money in African Gold’s bank account to cover
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`certain essential business expenses, such as fees for the company’s lawyers, accountants, and
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`auditor, so that his theft would remain undetected.
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`6.
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`But by August 2022, Morgenthau had run out of money. The bank accounts for
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`African Gold and Strategic Metals were empty. African Gold vendors refused to perform work
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`for the company, and Morgenthau’s scheme was exposed. African Gold fired Morgenthau on
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`August 26, 2022.
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`7.
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`By knowingly or recklessly engaging in the conduct described in this Complaint,
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`Morgenthau violated, and unless restrained and enjoined will continue to violate, Section 17(a) of
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`the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)], Sections 10(b) and 13(b)(5)
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`of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78j(b), 78m(b)(5)] and
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`Rules 10b-5, 13b2-1, 13b2-2(a) and (b), and 13a-14 thereunder [17 C.F.R. §§ 240.10b-5,
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`240.13b2-1, 240.13b2-2(a) and (b), and 240.13a-14].
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`NATURE OF PROCEEDING AND RELIEF SOUGHT
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`8.
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`The Commission seeks a permanent injunction against the Defendant, enjoining
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`him from engaging in the transactions, acts, practices, and courses of business of the type alleged
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`in this Complaint; disgorgement of all ill-gotten gains from the unlawful conduct set forth in this
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`Complaint, together with prejudgment interest; civil penalties pursuant Section 20(d) of the
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`Securities Act [15 U.S.C. §77t(d)] and/or Section 21(d)(3) of the Exchange Act [15 U.S.C.
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`3
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 4 of 22
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`§78u(d)(3)]; an order prohibiting the Defendant from acting as an officer or director of any issuer
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`that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C.
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`§ 781], or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.SC.
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`§ 78o(d)] and such other relief as the Court may deem just and appropriate.
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`JURISDICTION AND VENUE
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`9.
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`This Court has jurisdiction over this action pursuant to Section 22(a) of the
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`Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15
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`U.S.C. §§ 78u(d), 78u(e), and 78aa]. The Defendant has directly or indirectly made use of the
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`means or instrumentalities of interstate commerce, or of the mails, or the facilities of a national
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`securities exchange in connection with the acts, practices, transactions, and courses of business
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`alleged in this Complaint.
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`10.
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`Venue in this District is proper under Section 22(a) of the Securities Act [15 U.S.C.
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`§ 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa] because during the Relevant
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`Period, the Defendant lived in this District; African Gold’s principal place of business was in this
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`District; Strategic Metals’ principal place of business was in this District; and the Defendant’s
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`conduct constituting the violations alleged in this Complaint occurred largely in this District.
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`DEFENDANT
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`11.
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`Cooper J. Morgenthau, 35, is a resident of New York, New York. Morgenthau
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`served as African Gold’s CFO from October 2020 until August 26, 2022, when he was fired.
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`Morgenthau is the CFO of Strategic Metals Acquisition Corp. I and Strategic Metals Acquisition
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`Corp II.
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`4
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 5 of 22
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`RELEVANT ENTITIES
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`12.
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` African Gold Acquisition Corp. is a publicly traded SPAC incorporated in the
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`Cayman Islands with its principal place of business in New York, New York. African Gold’s
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`securities are registered with the Commission pursuant to Section 12(b) of the Exchange Act.
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`African Gold is listed on the New York Stock Exchange under the symbols AGAC.U, AGAC, and
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`AGAC.W. African Gold is searching for a company to acquire. According to the terms of its
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`prospectus, African Gold has until March 2, 2023, to acquire a company, absent an extension.
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`13.
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`Strategic Metals Acquisition Corp. I (“Strategic Metals I”) is a company
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`incorporated in the Cayman Islands for the purpose of becoming a publicly traded SPAC.
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`Morgenthau is the CFO of Strategic Metals I. Strategic Metals I never completed its initial public
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`offering of securities.
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`14.
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`Strategic Metals Acquisition Corp. II (“Strategic Metals II”) is also a company
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`incorporated in the Cayman Islands for the purpose of becoming a publicly traded SPAC.
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`Morgenthau is the CFO of Strategic Metals II. Strategic Metals II never completed its initial public
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`offering of securities.
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`FACTUAL ALLEGATIONS
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`15.
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`Cooper Morgenthau was African Gold’s Chief Financial Officer from the
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`company’s incorporation in October 2020, until he was fired in August 2022. As a SPAC, African
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`Gold has no operations, other than searching for a company to acquire. During the Relevant Period,
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`African Gold’s only employees were its Chief Financial Officer (Morgenthau), Chief Executive
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`Officer, and Chief Operating Officer. As a publicly traded company, African Gold is managed by
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`a board of directors.
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`5
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 6 of 22
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`16.
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` African Gold’s stock began trading publicly on the New York Stock Exchange on
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`February 26, 2021. Its initial public offering of securities raised approximately $414 million from
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`investors, all of which was placed in a trust account to which Morgenthau did not have access.
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`But Morgenthau did have access to African Gold’s operating bank account, which immediately
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`after the initial public offering of securities, held approximately $1.5 million. This money was
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`intended to fund African Gold’s efforts to identify and acquire a company in the gold mining
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`industry. As African Gold’s CFO, Morgenthau had authority to make deposits into and
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`withdrawals from this bank account to further African Gold’s efforts to acquire such a company.
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`Morgenthau Embezzled African Gold’s Funds.
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`17.
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`On June 4, 2021, Morgenthau transferred $36,700 from the African Gold operating
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`bank account to one of his personal brokerage accounts to fund trading in meme stocks. Similarly,
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`on June 15, 2021, Morgenthau transferred $25,000 from the African Gold operating bank account
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`to his own checking account for personal expenses wholly unrelated to African Gold. These were
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`the first in a series of 34 withdrawals that Morgenthau made during June and July 2021, each below
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`a $50,000 threshold that would have triggered secondary review and approval by an African Gold
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`board member. In all, Morgenthau transferred more than $1.2 million during this time to his
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`personal bank and brokerage accounts, leaving African Gold with just $100 in its operating bank
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`account by July 29, 2021.
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`18.
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`To hide this theft from African Gold and from the company’s external accountants
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`and auditor, Morgenthau falsified the company’s monthly operating bank account statements,
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`deleting all references to his unauthorized withdrawals and falsifying the month-end balances and
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`6
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 7 of 22
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`other transactional information.1 For example, Morgenthau erased $1,150,200 in unauthorized
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`transfers into his checking and brokerage accounts from African Gold’s June 30, 2021 operating
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`bank account statement. Portions of African Gold’s actual June 2021 operating bank account
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`statement and Morgenthau’s falsified statement are below. Falsified information is highlighted:
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`Actual June 30, 2021 Bank Statement
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`Falsified June 30, 2021 Bank Statement
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`1 As a SPAC with limited operations and few employees, African Gold did not have an internal
`finance department and instead outsourced the majority of its financial reporting functions to
`external accountants during the Relevant Period. Similarly, African Gold did not have an
`internal audit department and hired an external auditor to conduct all reviews and audits of its
`financial statements.
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`7
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 8 of 22
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`Morgenthau Lied to African Gold’s Accountants and Auditor.
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`19. Morgenthau emailed the falsified monthly operating bank account statements to
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`African Gold’s accountants each quarter. He did so knowing that the accountants would rely on
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`these falsified statements to generate and maintain African Gold’s books and records, and compile
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`the financial statements that the company incorporated into its quarterly and annual reports filed
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`with the Commission and made available to the investing public. As a result, African Gold’s books
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`and records contained material errors and omissions, as did the company’s financial statements
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`derived from those books and records.
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`20. Morgenthau also emailed these falsified operating bank account statements to
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`African Gold’s auditor, knowing that the auditor would rely on them to conduct quarterly reviews
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`of African Gold’s financial statements and an annual audit of those financial statements. In
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`connection with those quarterly reviews and the annual audit, Morgenthau provided several letters
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`to African Gold’s auditor falsely attesting that all material transactions “have been properly
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`recorded in the accounting records underlying the . . . financial statements.” He further claimed
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`he had “no knowledge of any fraud or suspected fraud affecting the Company involving:
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`a. management; b. employees who have significant roles in internal control; or c. others where the
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`fraud could have a material effect on the . . . financial statements.” Morgenthau made these
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`misrepresentations to the auditor in a series of letters dated August 16, 2021; November 22, 2021;
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`April 15, 2022; and May 16, 2022. Every time he made these statements, Morgenthau knew they
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`were false and misleading, and he knew that the auditor would rely on them in reviewing and
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`auditing African Gold’s periodic financial statements.
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`8
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 9 of 22
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`Morgenthau Made False Filings with the Commission.
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`21.
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` As a publicly traded company whose securities were registered with the
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`Commission, African Gold was required to file periodic reports with the Commission, including
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`annual (Forms 10-K) and quarterly (Forms 10-Q) reports. African Gold was required, among other
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`things, to include financial statements in its quarterly and annual reports that accurately and fairly
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`reflected its financial condition. Once filed, African Gold’s periodic reports and accompanying
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`financial statements became available to the investing public.
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`22.
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`As African Gold’s CFO, Morgenthau was responsible for reviewing and approving
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`the company’s financial statements and its quarterly and annual reports. Morgenthau signed each
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`of African Gold’s quarterly and annual reports before they were filed with the Commission. He
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`also signed certifications under the Sarbanes-Oxley Act of 2002, attesting that, among other things:
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`(a) each report did not include any material misstatements or omissions; (b) each report fairly
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`presented, in all material respects, African Gold’s financial condition for that period; and
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`(c) Morgenthau disclosed to African Gold’s auditor and the audit committee of African Gold’s
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`board of directors any fraud involving management with a significant role in African Gold’s
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`internal control over financial reporting. Despite those certifications, Morgenthau knew that
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`African Gold’s periodic reports materially misstated the company’s financial condition, beginning
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`in the second quarter of fiscal year 2021 (the quarter ended June 30, 2021) and continuing through
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`the first quarter of 2022 (the quarter ended March 31, 2022) and that those material misstatements
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`were the result of Morgenthau’s own fraud, which he reported to no one. Moreover, Morgenthau
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`knew that the quarterly and annual reports contained other false statements about African Gold’s
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`internal controls, use of working capital, and other matters.
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`9
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 10 of 22
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`23.
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`Regarding the company’s financial condition, for example, African Gold reported
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`in its Form 10-Q for the second quarter of 2021 (the quarter ended June 30, 2021) that it held $1.3
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`million in cash that it could use to search for a company to acquire. Because of Morgenthau’s
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`theft, however, African Gold held only $101,303, and thus overstated its cash holdings in its Form
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`10-Q by more than 1,100 percent. Similarly, in its Form 10-Q for the third quarter of 2021 (the
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`quarter ended September 30, 2021), African Gold reported $932,771 in cash. But in reality,
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`African Gold held only $104,371 in cash because of Morgenthau’s theft, and thus overstated its
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`cash holdings in its Form 10-Q by more than 793 percent.2
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`24.
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`During this time, Morgenthau used the money he stole from African Gold primarily
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`to trade options contracts for meme stocks in his personal accounts. His trading strategy was not
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`successful; he quickly lost all of the stolen funds that he invested.
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`25.
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`Near the end of the fourth quarter of 2021 (quarter ended December 31, 2021),
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`African Gold’s bank account should have held $544,103 according to Morgenthau’s falsified
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`operating bank account statements, but in reality the bank account instead held a negative balance
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`of $5,042 because of Morgenthau’s theft. Morgenthau knew that African Gold’s auditor would
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`confirm directly with the bank the actual account balance as of December 31, 2021, as a part of its
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`year-end audit. Morgenthau also knew that if the auditor discovered that the account was missing
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`more than half a million dollars, his scheme would unravel. So on December 30, 2021,
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`Morgenthau emailed at least seven investors in Strategic Metals, telling them that he “urgently”
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`needed additional funding by the next business day in order for the underwriters to start marketing
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`2 As noted, Morgenthau had drained all but $100 of African Gold’s cash by July 29, 2021.
`Thereafter he periodically deposited funds that he had fraudulently raised from Strategic Metals’
`investors into the African Gold bank account in order to cover certain essential business
`expenses, including payments to African Gold’s lawyers, accountants, and other service
`providers, and thereby prevent discovery of his theft.
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`10
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 11 of 22
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`the SPACs prior to their initial public offerings of securities. He offered these investors additional
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`founder shares and private placement warrants issued by Strategic Metals if they immediately
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`increased their investments in the SPACs.3 Morgenthau’s statements to investors in Strategic
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`Metals about the purpose of these funds were false and misleading. Morgenthau “urgently” needed
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`the investors’ money not to start marketing Strategic Metals, but to temporarily cover up his theft
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`from African Gold and deceive its auditor in connection with its year-end audit. Through these
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`false statements, Morgenthau raised approximately $625,000 from Strategic Metals’ investors on
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`December 30 and December 31, 2021. At Morgenthau’s direction, investors sent the funds to one
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`of Strategic Metals’ bank accounts. Morgenthau immediately transferred the entire $625,000 from
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`that Strategic Metals account to various personal accounts, and then transferred $549,145.73 from
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`his personal checking account to African Gold’s operating bank account. As a result, African
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`Gold’s year-end account balance was $544,103.39—the exact amount needed to match the year-
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`end balance according to Morgenthau’s falsified bank statements. Portions of African Gold’s
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`actual December 2021 operating bank account statement and Morgenthau’s falsified statement are
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`below. Falsified information is highlighted:
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`Actual December 31, 2021 Bank Statement
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`3 Founder shares refer to Class B shares initially purchased in private placement offerings; they
`convert to Class A shares (i.e., those issued to the public in an initial offering) if and when the
`SPAC completes its acquisition of a company.
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`11
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 12 of 22
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`Falsified December 31, 2021 Bank Statement
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`26.
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`The $544,103.39 did not stay in African Gold’s operating bank account very long.
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`On January 3, 2022—the first business day of the new year—Morgenthau began withdrawing the
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`money he had deposited just days before, transferring approximately $401,000 on that day alone
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`from the African Gold operating bank account to his personal bank accounts. He continued to
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`withdraw funds from the African Gold operating bank account over the next few days, sending the
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`money to himself to fund his trading in crypto asset securities. By the end of the month, the African
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`Gold operating bank account held only $13.
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`27.
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`Throughout much of 2022, Morgenthau occasionally deposited funds into the
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`African Gold operating bank account. All of those funds, however, came from Morgenthau’s
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`ongoing Strategic Metals fraud scheme. While Morgenthau was stealing money from African
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`Gold, he was simultaneously and fraudulently raising millions of dollars from more than 50
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`investors to launch the Strategic Metals SPACs. This fraud scheme is described in greater detail
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`below. Morgenthau used most of the money he raised for Strategic Metals to fund his trading in
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`crypto asset securities and pay for personal expenses. But he also funneled some of Strategic
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`Metals’ money into African Gold’s operating bank account in order to pay certain essential African
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`Gold business expenses—money owed to African Gold’s accountants, lawyers, and auditor, for
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`example—and thereby hide or delay the discovery of his theft. Despite these occasional deposits,
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`12
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 13 of 22
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`the African Gold operating bank account ran a negative average balance every month from March
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`2022 through Morgenthau’s termination in August 2022. Throughout this time, Morgenthau
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`continued to falsify bank statements that he provided to African Gold’s accountants and auditor in
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`order to hide his theft.
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`28.
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`As a result, Morgenthau caused African Gold to materially misrepresent its
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`financial condition to investors throughout much of 2021 and well into 2022. Misstatements in
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`African Gold’s financial statements relating to its reported cash balance are summarized in the
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`table below.
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`Reported Cash
`Actual Cash
`Overstatement
`Overstatement as % of
`Actual Cash (Absolute
`Value)
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`Q2 FY 2021
`$1,251,503
`$101,303
`$1,150,200
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`Q3 FY 2021
`$932,771
`$104,371
`$828,400
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`Q4 FY 2021
`$544,103
`$544,1034
`$ -
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`Q1 FY 2022
`$432,819
`$(1,761)
`$434,580
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`1135.4%
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`793.7%
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`0.0%
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`24671.2%
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`29. Morgenthau also caused African Gold to misrepresent the sufficiency of its working
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`capital to fund its effort to acquire a company by its March 2, 2023 deadline (absent an extension),
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`and the purposes for which it would use its available cash. For example, in African Gold’s Form
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`10-Q for the second quarter of 2021 (the quarter ended June 30, 2021), the company reported that
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`it held approximately $1.3 million in cash, and that based on its reported cash balance and other
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`factors, “management believes that the Company will have sufficient working capital” to meet its
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`needs for one year or until African Gold acquired a target company. This statement was materially
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`4 As described above, the account held $544,103 for only one business day before Morgenthau
`began draining the account on January 3, 2022. The Form 10-K contained other
`misrepresentations relating to the non-cash balance portion of the financial statements and other
`matters.
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`13
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 14 of 22
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`misleading because African Gold had only approximately $101,300 in cash left at that time, due
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`to Morgenthau’s ongoing theft, and that amount was almost certainly insufficient to fund African
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`Gold’s ongoing search for a company to acquire by its March 2023 deadline. Moreover, African
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`Gold disclosed that it would use its cash “for paying existing accounts payable, identifying and
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`evaluating prospective [acquisition] candidates, performing due diligence on prospective target
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`businesses, paying for travel expenditures, selecting the target business to merge with or acquire,
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`and structuring, negotiating and consummating the [acquisition].” These were the only
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`permissible uses of African Gold’s cash; funding Morgenthau’s personal expenses and securities
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`trading was not among them, and therefore Morgenthau’s actions rendered this statement to
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`investors materially misleading.
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`30. Morgenthau caused African Gold to make similar false and misleading statements
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`regarding the sufficiency of its working capital and the purposes for which it would use its cash
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`holdings in Forms 10-Q filed with the Commission for the third quarter of 2021 (the quarter ended
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`September 30, 2021) and the first quarter of 2022 (the quarter ended March 31, 2022).
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`31.
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`In a series of announcements in late August and September 2022, African Gold
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`reported that its financial statements contained in quarterly reports filed with the Commission for
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`the second and third quarters of 2021 (the quarters ended June 30 and September 30, 2021), its
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`annual report for 2021 (the fiscal year ended December 31, 2021), and its quarterly report for the
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`first quarter of 2022 (the quarter ended March 31, 2022) must be restated and should not be relied
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`upon.5 Because Morgenthau stole the majority of African Gold’s working capital, African Gold
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`5 African Gold has not yet filed a quarterly report for the second or third quarters of 2022, and
`has not yet issued any restated financial statements.
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 15 of 22
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`had to borrow approximately $830,000 from its initial private investors in September 2022 in order
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`to fund its operations and continue its search for a company to acquire.
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`Morgenthau Misappropriated Funds from Strategic Metals’ Investors.
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`32.
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`December 30, 2021, was not the first—or the last—time that Morgenthau lied to
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`investors in Strategic Metals to solicit, obtain, and misappropriate their investments. Most
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`significantly, he misrepresented to numerous investors the purpose for which their investments
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`would be used. Ultimately Morgenthau used all of the money he raised from Strategic Metals’
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`investors—approximately $4.7 million—to pay personal expenses, fund securities trading (first in
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`meme stocks and later in crypto asset securities) in his personal accounts, and cover up his theft
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`from African Gold.
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`33.
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`Beginning in July 2021, Morgenthau solicited investors in Strategic Metals, which
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`Morgenthau claimed would likely make initial public offering of securities by late 2021. Strategic
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`Metals never conducted initial public offerings of securities.
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`34.
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`Investors in Strategic Metals purchased founder shares and private placement
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`warrants in accordance with their investment contracts. Morgenthau represented to investors that
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`Strategic Metals would use their investment as working capital to pay relevant business expenses
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`in connection with, among other things, the initial public offerings of securities and the search for
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`companies to acquire. For example, in a November 18, 2021 email, Morgenthau sent three
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`prospective investors various documents including a draft securities registration statement for
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`Strategic Metals that set forth each category of expenses for which the money raised from the
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`private placement would be used, including those categories of expenses referenced above, and
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`stated: “We do not anticipate any change in our intended use of proceeds . . . .” Morgenthau knew
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`these representations were false because he intended at the time he raised the money to use it to
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`fund personal securities trading and to cover up his theft from African Gold. None of these
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`
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 16 of 22
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`purposes were identified in any documentation he sent to investors. Two of the recipients of
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`Morgenthau’s email invested a total of $150,000 in Strategic Metals in exchange for founder shares
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`and private placement warrants. The investors transferred the $150,000 to Strategic Metals’ bank
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`account. Morgenthau transferred the money to one of his personal bank accounts almost
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`immediately after it was received.
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`35.
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`Indeed, Morgenthau generally withdrew any money from the Strategic Metals’
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`bank account as soon as investors deposited it, and he used that money to cover up his theft from
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`African Gold and to fund his personal trading and personal expenses. Morgenthau withdrew
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`money from the Strategic Metals’ bank account on the very same day that it was deposited by
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`investors on approximately 10 different occasions, totaling more than $1.1 million, and separately
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`instructed certain investors to wire money directly to his personal bank and brokerage accounts.
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`When one investor specifically asked Morgenthau whether the investor should be “surprised” that
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`he was wiring money to one of Morgenthau’s personal accounts, Morgenthau falsely assured the
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`investor that the account in Morgenthau’s name “is dedicated to Strategic Metals – there is no
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`personal activity in this . . . account.” To the contrary, Morgenthau used this account and his other
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`personal accounts for numerous types of activities unrelated to Strategic Metals.
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`36.
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`In total, Morgenthau raised approximately $4.7 million from more than 50 investors
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`in Strategic Metals between July 2021 and July 2022. Morgenthau misappropriated the entire $4.7
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`million, using it to fund personal trading, personal expenses, and temporarily cover up his theft of
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`money from African Gold. Because of Morgenthau’s theft, there was no money in any Strategic
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`Metals’ bank account by the end of July 2022.
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`Case 1:23-cv-00022-NRB Document 1 Filed 01/03/23 Page 17 of 22
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`37.
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`By August 2022, Morgenthau used about $647,000 of the money he stole from
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`Strategic Metals to pay certain African Gold business expenses. Morgenthau either spent or lost
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`through speculative trading all of the remaining stolen funds.6
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`CLAIMS FOR RELIEF
`
`FIRST CLAIM FOR RELIEF
`FRAUD IN THE OFFER OR SALE OF SECURITIES
`(Violations of Sections 17(a) of the Securities Act)
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`Paragraphs 1 through 37 above are re-alleged and incorporated by reference as if
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`38.
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`fully set forth herein.
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`39.
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`During the Relevant Period, the founder shares and private placement warrants
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`issued by Strategic Metals Acquisition Corp. I and Strategic Metals Acquisition Corp. II each were
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`securities under Section 2(a)(1) of the Securities Act [15 U.S.C. §77b(a)(1)].
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`40.
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`By reason of the conduct described above, defendant Morgenthau, in connection
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`with the offer or sale of securities, by the use of the means or instrumentalities of interstate
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`commerce or of the mails, directly or indirectly, acting intentionally, knowingly, recklessly or
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`negligently (i) employed devices, schemes, or artifices to defraud; (ii) obtained money or property
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`by means of untrue statements of material facts or omissions to state material facts necessary in
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`order to make the statements made, in light of the circumstances under which they were made, not
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`misleading; and (iii) engaged in transactions, practices, or courses of business which operated or
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`would operate as a fraud or deceit upon any persons, including purchasers or sellers of the
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`securities.
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`
`6 In addition to losing misappropriated funds through securities trading, Morgenthau lost a
`substantial amount of money that he did not misappropriate from African Gold or from investors
`in Strategic Metals.
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`
`
`17
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