Two men charged with securities fraud for an alleged scheme involving a $100 million New Jersey deli pleaded not guilty during a court hearing on Tuesday.
Peter Coker Sr., 80, and James Patten, 63, were arrested in North Carolina last month. They were indicted by the Department of Justice in a 12-count indictment for conspiracy to commit securities fraud, securities fraud, and conspiracy to manipulate securities prices. Patten is also charged with four counts of manipulation of securities, four counts of wire fraud, and one count of money laundering.
In addition, the U.S. Securities and Exchange Commission has accused the men of market manipulation.
According to a complaint filed by the DOJ, Coker Sr., his 53-year-old son Peter Coker Jr. and Patten took steps to gain control of Hometown International and a separate shell company called E-Waste Corporation with the intention of selling their shares at a significant profit through reverse mergers. A reverse merger is a transaction where an existing public company merges with a private operating company.
After gaining control of the companies, the trio allegedly arranged for the transfer of millions of the company's shares to a number of entities, including some controlled by Coker Jr., as well as to the trading accounts of family members, friends and associates. The accounts were then accessed to commit a number of "match and wash" trades.
Hometown International, which began selling shares around October 2019 on the OTC Marketplace, operated Paulsboro, New Jersey-based Your Hometown Deli. The deli closed on Aug. 9 after Makamer Holdings disposed of its subsidiary Your Hometown Deli, LLC. In addition, the company disposed of any remaining inventory. All Your Hometown Deli, LLC transactions have been recorded as discontinued operations as of June 30, 2022, a regulatory filing said.
|HOMETOWN INTERNATIONAL INC COM USD0.0001
The DOJ alleges the scheme artificially inflated Hometown and E-Waste's stocks by approximately 939% and 19,900%, respectively.
The Securities and Exchange Commission says Hometown International saw its share price climb from approximately $1 per share in October 2019 to nearly $14 per share by April 2021, leading to a "grossly inflated" market capitalization of $100 million for one deli that produced less than $40,000 in annual revenue.
Peter Coker Sr. is represented by Marc Agnifilo, who has previously defended "pharma bro" Martin Shkreli and disgraced film producer Harvey Weinstein. Meanwhile, Patten has hired Ira Sorkin, who has previously represented late Ponzi schemer Bernie Madoff.
Sorkin told FOX Business the charges are "not supported by the facts" and that he believes the evidence at trial will support Patten and the legal team's position. Agnifilo declined to comment. Sorkin did not immediately return FOX Business' request for comment. Coker Jr., who is also being charged, is based in Hong Kong and considered at large.
The securities fraud and manipulation of securities prices counts each carry a maximum penalty of 20 years in prison and a $5 million fine. The wire fraud and money laundering counts are punishable by a maximum penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. The counts of conspiracy to commit securities fraud and conspiracy to manipulate securities prices both carry a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest.