$100 million New Jersey deli stock fraud case guilty plea

Your Hometown Deli in Paulsboro, N.J.

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A North Carolina ex-convict pleaded guilty to securities fraud in connection with conspiring to manipulate the stock of a company that once had a market capitalization of as high as $100 million despite owning just one, small money-losing deli in southern New Jersey.

Disgraced former stockbroker James Patten also admitted on Wednesday in Camden, New Jersey, federal court to conspiring with two other men to manipulate the share price of another related shell company, which had no tangible assets. That company’s market cap was even higher than the Hometown International deli company the men controlled.

Prosecutors said that Patten, 64, and the other two defendants conspired over eight years to increase the stock price of Hometown International and the shell company E-Waste to create a false impression of demand for the firms’ shares, and better position them as candidates for so-called reverse mergers with privately owned companies.

Courtroom sketch of James Patten, left, and attorney Ira Sorkin at N.J. District Court in Camden, N.J., Oct. 11, 2022

Source: Elizabeth Williams

The other defendants, Peter Coker Sr. and son Peter Coker Jr., remain charged in the case, in which they have pleaded not guilty.

The Cokers and Patten also are being sued over the alleged scheme by the Securities and Exchange Commission. That lawsuit in New Jersey federal court has been paused until the resolution of the criminal case.

The scheme relied on a pattern of coordinated stock trading between a relatively small number of accounts nominally held by family members, friends and associates, according to court documents.

As a result, Hometown and E-Waste’s stock prices were artificially inflated by 939% and 19,900%, respectively.

The scheme began in 2014, when Patten suggested the creation of Hometown as an umbrella corporation to a friend, a high school principal and wrestling coach named Paul Morina, to own Your Hometown Deli, which Morina and another person were discussing opening in Paulsboro at the time. Morina and the other deli owner were unaware of Patten’s scheme to manipulate Hometown’s stock, authorities have said.

Hometown Deli, Paulsboro, N.J.

Mike Calia | CNBC

Patten’s guilty plea to securities fraud, and conspiracy to commit securities fraud, could well ratchet up pressure on both Cokers to reach plea deals in the case.

Coker Sr., who lives in North Carolina, remains free on bond, while Coker Jr., a former Hong Kong resident who was arrested as a fugitive in Thailand in January, is being held without bond in a New Jersey jail.

Charges were filed against the trio in September 2022, more than a year after CNBC detailed a series of questionable connections between Hometown and E-Waste, past criminal and civil court issues of Patten and the elder Coker, and eyebrow-raising consulting deals with the companies that benefitted those two men. Your Hometown Deli closed earlier in 2022.

CNBC’s reporting was sparked by a client…

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