It was the gimmick of the century. Not only did a tiny New Jersey deli become a publicly traded company, it mysteriously grew to a market value of over $100 million. Three men are now indicted for illegally withdrawing stock in the company. Aims to dump their shares and miss out on profits. They didn’t even have a chance to pocket the ill-gotten bread.
On Monday, 63-year-old James Patten, 80-year-old Peter Coker Sr., and 53-year-old Peter Coker Jr. were charged with manipulating stock prices in a separate action by the Securities and Exchange Commission and the Justice Department. Deli’s parent company, Hometown International, and his two, another business called E-Waste.
The men have been charged with securities fraud, securities fraud and conspiracy to manipulate securities prices, and Patten faces “four counts of securities manipulation, four counts of wire fraud and one count of money laundering.” Separately, the SEC is seeking its own penalties, including disgorgement and a “ban on participation in penny stock offerings.”
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Patten and Coker Sr. were arrested on Monday, while Hong Kong resident Coker Jr. is still at large, the Justice Ministry said.
Prosecutors claim the sandwich scheme dates back to 2014, when two New Jersey individuals expressed interest in opening a deli. One of those individuals he was a friend of Patten’s, and he is said to have proposed a very complex corporate structure for the fledgling business. A “holistic enterprise” named Hometown International will take over ownership of the deli. “By creating Hometown International, we explained that we could easily scale in case of emergency,” Patten said. [deli] It was a success,” the indictment said.
However, the DOJ added that “unbeknownst to the deli owners,” Patten and his associates began laying the groundwork for the plan “shortly after Hometown International was established.”
Their alleged crime was relatively simple. Through coordinated trading, they “injected inaccurate information into the market and created a false impression of supply and demand.”From the outside, private investors were very interested in his two stocks. seemed to have Hometown International’s stock price ultimately surged 939%, according to DOJ, while E-Waste soared his 19,900%.
To conceal their activities, the defendants allegedly gave shares in the business to “family, friends, and associates” and “obtained login information and controlled trading accounts.”
But the underlying numbers never made sense. Deli’s annual income was less than his $40,000, but in his prime he boasted a nine-figure market value. Hometown International, in particular, attracted a great deal of media attention and the attention of Wall Street. big game Like billionaire David Einhorn.
According to the SEC, that attention brought unnecessary scrutiny to the defendants “before they were able to obtain the intended benefits of the scheme.”
The three are now facing serious penalties. The crimes of securities fraud, securities price manipulation, wire fraud, and money laundering carry penalties of up to 20 years in prison, with fines of hundreds of thousands or millions of dollars respectively.
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