Two men charged in an alleged inventory manipulation scheme involving a small-town New Jersey delicatessen are scheduled to appear Tuesday morning in a federal courthouse about a 20-minute drive from the now-closed store 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 scheduled to appear in U.S. District Court in Camden, New Jersey, just across the street side of the Philadelphia Bridge.
The two are charged with multiple federal crimes, including fraud, for allegedly increasing the value of a publicly traded company that reached a market capitalization of more than $100 million last year while not had Your Hometown Deli in Paulsboro, New Jersey, named after him. . The deli was making less than $40,000 in sales a year.
Federal prosecutors described the case as a story of international fraud and treason. Peter Coker Jr., 53, the son of Coker Sr., is based in Hong Kong and is considered a big guy. Federal authorities sought to imprison Coker Sr. before agreeing to parole. The Securities and Exchange Commission also sued the men in civil court over the alleged conspiracy.
The men have been charged for their involvement with Hometown International and a similar front 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 in the so-called over-the-counter markets had jumped 939% and 19,900%, respectively.
Coker Sr. will be represented by Marc Agnifilo, who previously defended fraudster and “pharma bro” Martin Shkreli, disgraced film producer Harvey Weinstein, NXIVM cult leader Keith Raniere and a sanctioned Russian bank over the invasion of Ukraine.
Agnifilo did not immediately respond to CNBC’s request for comment.
The men are charged with conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices. Charges of fraud and manipulation carry a maximum sentence of 20 years and a maximum fine of $5 million.
Patten is further charged with securities manipulation, wire fraud and money laundering.
According to the indictment, the men tricked the founders of Your Hometown Deli — Paul Morina, a former high school wrestling teammate of Patten, and Morina’s co-worker Christine Lindenmuth — into telling them the umbrella company could help. to the expansion of the restaurant. Neither Morina, principal and wrestling coach at Paulsboro High School, nor Lindenmuth, a math teacher at the same school, were mentioned by name in the court documents.
The men then coordinated to control and transfer shares of Hometown International between themselves and their friends in an effort to inflate the stock price, prosecutors said.
Prosecutors said the men personally enriched themselves through consulting deals that paid Coker Sr.’s company, North Carolina-based Tryon Capital, $15,000 a month and $25,000 a month to the company. of Coker Jr., VCH Limited, based in Macau. James Patten was a partner at Tryon Capital.
The men had similar, albeit smaller, consultancy 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 both vehicles, authorities said.
When Makamer Holdings, a bioplastics company, launched a reverse merger with Hometown International, the grocery store was sold for $15,000. The deli is now permanently closed.
Coker Sr. and Patten have had run-ins with regulators and the law before.
Coker Sr. was sued in 1992 for allegedly hiding money from creditors and alleged business fraud. He has denied wrongdoing in those cases, one of which was settled out of court in recent years in North Carolina. That same year, Coker Sr. was also charged with indecent exposure to minors.
In 2006, James Patten was expelled from FINRA, the brokerage regulator, for failing to comply with an arbitration award of more than $753,000 for violations of securities laws, unauthorized trading and stock rotation. a customer’s account.
The peculiarities surrounding Your Hometown Deli first caught the attention of hedge fund manager David Einhorn in 2021.
“The pastrami must be amazing,” Einhorn joked at the time. After the charges last monthhe tweeted, “Guess the pastrami wasn’t so good.”