How does a small New Jersey deli end up worth $100 million? This is what the regulators in the United States are trying to check now. James Patten, Peter Cocker Sr. and Peter Cocker Jr. face heavy prison terms and fines for allegedly manipulating markets and defrauding investors.
All three are charged with wire fraud and other crimes in an alleged scam involving a company that is worth $100 million in the stock market, even though its only asset is a small deli in a New Jersey town, federal authorities said Monday.
The defendants – James Patten, 63, of North Carolina; Peter Coker Sr., 80, of North Carolina; and his son, Peter Cocker Jr., 53, of Hong Kong – were charged with 12 counts, including conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices. Patten and Coker Sr. were arrested and appeared last Monday in a North Carolina court. Coker Jr. is still at large.
Federal prosecutors said Patten is also charged with four counts of securities manipulation, four counts of bank fraud and one count of money laundering. The US Securities and Exchange Commission (SEC) announced that its investigation is still ongoing.
Coker Jr. was chairman of Hometown International, while Coker Sr. was a shareholder in the company. The deli at the center of the investigation, Your Hometown, was located in Paulsboro, New Jersey, and its profits were low: sales revenue in 2020 was 13,976 dollars, and in 2021 they stood at 25,004 dollars.
The business was praised for its steak sandwiches and Italian dishes, but closed earlier this year and its parent company, Hometown International, merged with Bioplastics. The “E-Waste” company, which has ties to the deli, also merged with another company last year.
The publicity the deli received and the controversy surrounding the people involved raised questions about its parent company. The accusations are also related to the involvement of the three in the “E-Waste” company.
“The pastrami there must be amazing”
The small deli in New Jersey, worth $100 million, was first brought to the public’s attention by hedge fund manager Greenlight Capital, investor David Einhorn, in a letter he published in April 2021. “The pastrami there must be amazing,” he wrote.
CNBC reported more on the company, including revealing details about then-CEO Paul Morina – a legendary high school boxing coach in southern New Jersey. Patten, one of the defendants, wrestled in high school with Morina. Prosecutors claim that Patten convinced the owner of the deli , established in 2014, to bring it under the control of an umbrella company called “Hometown International”.
“Unbeknownst to the owners of the deli, almost immediately after the establishment of Hometown International, Patten and his partners began positioning the company as a vehicle for a reverse merger that would yield them significant profit,” the prosecutors announced.
In 2019, the company began selling shares in the so-called “OTC Marketplace” – trading over the counter – in which shares of small companies are traded. “Shortly thereafter, Patten, Coker Sr. and Coker Jr. executed a calculated scheme to obtain control of Hometown International’s management and stock from the owners of the deli,” prosecutors said.
The defendants allegedly took similar actions in order to take over an electronic waste company called “E-Waste”. That company’s stock also soared, even though it had no real business, CNBC reported. According to the prosecutors, the defendants used the companies to generate illegal profits by purchasing private companies in so-called “reverse mergers”.
The plaintiffs claim that the defendants “artificially inflated” the value of “Hometown International” and “E-Waste” shares by 939% and 19,900%, respectively.
As of last year, Patten has been banned by FINRA (the US Financial Services Regulatory Authority) from acting as a broker or associating with other brokers. FINRA has previously taken several disciplinary actions against Patten: in 2006, he successfully appealed sanctions imposed on him after he was accused of manipulation at the price of a stock listed on Nasdaq. The one who defended him then is the lawyer Ira Sorkin, who is known today mainly as the one who represented Bernie Madoff, who was convicted of the biggest Ponzi scam in history.
Patten, Coker Sr. and Coker Jr. face heavy prison terms and fines. The offenses with which they are accused carry maximum penalties of 20 years in prison and a fine of 5 million dollars.