- Peter Coker Sr. and James Patten, charged in an alleged scheme involving a small-town deli, are scheduled to appear in New Jersey federal court.
- The deli’s parent company, Hometown International, attained a $100 million market valuation despite having only the deli to its name.
- The men are accused of various federal crimes, including conspiracy, fraud and money laundering.
- Patten told CNBC that had hired attorney Ira Sorkin, who had previously represented late Ponzi schemer Bernie Madoff.
CAMDEN, N.J. – Two men accused in an alleged stock-manipulation scheme involving a small-town New Jersey deli are set to appear Tuesday morning at a federal courthouse that’s about a 20-minute drive from the now-closed shop at the heart of the case.
Peter Coker Sr., 80, and James Patten, 63, who were arrested by federal authorities last month in North Carolina, are set to show at the U.S. District Court in Camden, New Jersey, just over the bridge from Philadelphia.
Patten told CNBC before the hearing Tuesday that he would be represented by attorney Ira Sorkin, who is known for representing the late Ponzi schemer Bernie Madoff.
Coker Sr. will be represented by Marc Agnifilo, who has previously defended fraudster and “pharma bro” Martin Shkreli, disgraced movie producer Harvey Weinstein, NXIVM cult leader Keith Raniere, and a Russian bank sanctioned over the invasion of Ukraine. Agnifilo did not immediately respond to CNBC’s request for comment before the hearing.
Patten and Coker are accused of several federal crimes, including fraud, for allegedly pumping up the value of a publicly traded company that achieved a market capitalization of more than $100 million last year despite having only Your Hometown Deli in Paulsboro, New Jersey, to its name. The deli made less than $40,000 in sales a year.
Federal prosecutors have described the case as a tale of international fraud and betrayal. Peter Coker Jr., 53, the son of Coker Sr., is based in Hong Kong and is considered at large. Federal authorities sought to jail Coker Sr. before agreeing to a conditional release. The Securities and Exchange Commission also sued the men in civil case over the alleged plot.
The men were charged for their involvement in Hometown International and a similar shell company called E-Waste. Prosecutors alleged that the men sought to enrich themselves by inflating the prices of Hometown International and E-Waste. At one point, their values on so-called over-the-counter markets had surged by 939% and 19,900%, respectively.
The men are charged with conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices. The fraud and manipulation charges carry a maximum sentence of 20 years and a maximum fine of $5 million.
Patten is additionally charged with manipulation of securities, wire fraud and money laundering.
According to the indictment, the men duped the founders of Your Hometown Deli — Paul Morina, a former high school wrestling teammate of Patten’s, and Morina’s co-worker Christine Lindenmuth — telling them that the umbrella corporation could help with the restaurant’s expansion. Neither Morina, principal and wrestling coach at Paulsboro High School, nor Lindenmuth, a math teacher at the same school, were mentioned by name in court documents.
The men then coordinated to control and transfer Hometown International stock between themselves and their friends for the purpose of inflating the share price, prosecutors said.
Patten didn’t comment when asked Tuesday morning whether he had since spoken to Morina.
Prosecutors said Patten and the Cokers personally enriched themselves through consulting contracts that paid $15,000 a month to Coker Sr.’s company, North Carolina-based Tryon Capital, and $25,000 a month to Coker Jr.’s company, Macao-based VCH Limited. James Patten was a partner at Tryon Capital.
The men had similar, albeit smaller, consulting contracts with E-Waste.
Ultimately, the men planned to use both Hometown International and E-Waste as vessels for reverse mergers, which would allow other companies to go public through the two vehicles, authorities said.
When Makamer Holdings, a bioplastics company, initiated a reverse merger with Hometown International, the deli was sold for $15,000. The deli is now permanently closed.
Coker Sr. and Patten have had brushes with regulators and the law before.
Coker Sr. was sued in 1992 for allegedly hiding money from creditors and alleged business-related fraud. He has denied wrongdoing in those cases, one of which was settled out of court in recent years in North Carolina. The same year, Coker Sr. was also accused of indecent exposure to minors.
In 2006, James Patten was barred from FINRA, the broker-dealer regulator, for not complying with an arbitration award of more than $753,000 for violating securities laws, unauthorized trading and churning a client’s account.
The peculiarities surrounding Your Hometown Deli first caught the eye of hedge-fund manager David Einhorn in 2021.
“The pastrami must be amazing,” Einhorn quipped at the time. After the indictments last month, he tweeted: “I guess the pastrami wasn’t so great.”
Source: Business - cnbc.com
