NJ deli worth $100 million ends in criminal, civil fraud charges
TRENTON – The curious case of a Gloucester County deli that the stock market valued at more than $100 million has ended, perhaps predictably, in a dozen criminal and civil charges, including fraud, against its investor owners.
The Securities and Exchange Commission announced Monday that it charged three men – two from North Carolina and one of their sons, who lives in Hong Kong – for their alleged roles in orchestrating fraudulent manipulative securities trading schemes.
And federal prosecutors in New Jersey unsealed an indictment containing 16 charges, including conspiracy, securities fraud, manipulation of securities, wire fraud and money laundering.
At issue was the share price of Hometown International, which operated the now-closed Your Hometown Deli in Paulsboro.
The deli produced less than $40,000 a year in revenue, but authorities say that through manipulative trading the trio artificially inflated the parent company’s stock price from around $1 a share in October 2019 to nearly $14 a share by April 2021, putting its market capitalization exceeding $100 million.
The SEC says they did the same through a separate shell company, E-Waste Corp., whose stock went from 10 cents a share to $10 and a market value of $120 million, with the intent of acquiring private companies in reverse mergers and then dumping their shares at inflated prices.
News stories nearly a year and a half ago about the inflated stock price prevented them completing what Scott Thompson, the associate director of enforcement in the SEC’s Philadelphia regional office, called “brazen schemes.”
“Such manipulative schemes diminish the trust investors must have in the integrity of the markets, and we will pursue those who engage in such wrongdoing,” Thompson said.
Former New Jerseyan charged
Charges – including the parallel criminal charges announced by the U.S. Attorney’s Office in New Jersey – were filed against three people: James Patten, 63, of Winston-Salem, North Carolina; Peter Coker, 80, of Chapel Hill, North Carolina; and Peter Coker Jr., 53, of Hong Kong.
Patten lived in Basking Ridge until 2017. He previously worked as a stockbroker though was barred by the Financial Industry Regulatory Authority in 2006.
Patten and Coker Sr. were arrested and appeared Monday in a North Carolina federal court. Coker Jr. remains at large.
The securities fraud and manipulation of securities prices counts carry a maximum penalty of 20 years in prison and a $5 million fine. The wire fraud and money laundering counts are punishable by up to 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
The complaints say Patten helped a childhood friend – Paul Morina, the principal of Paulsboro High School and its longtime wrestling coach – and Christine Lindenmuth, a math teacher and administrator, open Your Hometown Deli in Paulsboro in 2015.
Shares of stock in Hometown International began being sold in 2014, even before the deli opened, unbeknownst to the deli’s day-to-day operators. Neither of them have been charged.