$100 million New Jersey deli scheme leads to U.S. fraud charges
By Jonathan Stempel
NEW YORK/WASHINGTON (Reuters) - Three men, including a father-and-son duo, were criminally charged on Monday with orchestrating a market manipulation scheme that briefly caused the owner of a tiny New Jersey deli to have a more than $100 million market valuation.
Peter Coker Sr, 80, Peter Coker Jr, 53, and James Patten, 63, were charged by the U.S. Department of Justice in a 12-count indictment with securities fraud and conspiracy, while Patten was also charged with wire fraud, money laundering and securities manipulation.
The U.S. Securities and Exchange Commission filed related civil charges.
Prosecutors in New Jersey said the defendants conspired since 2014 to inflate the prices of two publicly-traded companies, Hometown International and E-Waste Corp, through manipulative trading, and use them to generate illegal profits by acquiring private companies in so-called reverse mergers.
The alleged manipulation caused the stock prices of Hometown to rise 939% and E-Waste to rise 19,900%, prosecutors said.
Hometown's market value swelled as high as $123 million in April 2021 even though its sole asset, a Paulsboro, New Jersey-based business called Your Hometown Deli, generated just $13,976 of sales in 2020 and $25,004 in 2021.
The company merged this year into Makamer Holdings Inc, a Los Angeles bioplastics startup.
It closed the deli, which was located in a Philadelphia suburb, in June, and later sold the business for $15,000 and its inventory for $700, according to a regulatory filing.
Lawyers for the defendants could not immediately be identified. Peter Coker Sr, of Chapel Hill, North Carolina, and Patten, of Winston-Salem, North Carolina, were arrested on Monday. Peter Coker Jr, of Hong Kong, is at large.
Your Hometown Deli became a surprise subject of attention in April 2021 after hedge fund manager David Einhorn mentioned it in a letter to shareholders, where he warned of the dangers of risky stocks and need for more regulatory oversight.
"The pastrami must be amazing," Einhorn wrote.
(Reporting by Jonathan Stempel in New York and Doina Chiacu and Tyler Clifford in Washington; Editing by Chizu Nomiyama and Rosalba O'Brien)
