The owners of the infamous New Jersey “$100 million deli” have been charged with multiple crimes involving market manipulation, wire fraud, money laundering, and other financial crimes.
James Patten, 63, of Winston-Salem, North Carolina; Peter Coker Sr., 80, of Chapel Hill, North Carolina; and Peter Coker Jr., 53, of Hong Kong were charged with 12 counts of various financial crimes, authorities said on Monday. Patten and Coker Sr. were arrested on Monday; Coker Jr. has not yet been picked up by authorities.
Their charges include conspiracy to commit securities fraud, securities fraud, and conspiracy to manipulate security prices. Patten was further charged with four counts of wire fraud, four counts of manipulation of securities, and one count of money laundering. The two men who have been arrested appeared in a North Carolina court on Monday and will appear in front of a New Jersey court at a future date.
All three men have been accused by the Securities Exchange Commission. That investigation is ongoing.
According to authorities, Patten convinced the owners of the deli to incorporate the shop as a wholly owned subsidiary of an umbrella corporation owned by Patten. He immediately started positioning the company for a reverse merger to gain profits for himself.
After allegedly manipulating the stock price on small OTC stock exchanges, the umbrella corporation “Hometown International” gained a value of over $100 million, despite its only significant asset being Hometown Deli in Paulsboro, NJ, which had less than $40,000 in annual sales. The price discrepancy first became public when an investor wrote a letter to clients in 2021, resulting in the deli getting its nickname “the $100 million deli.”
OTC stock exchanges are semi-private stock exchanges where smaller companies can sell their shares. They have less regulation and often escape the eyes of the SEC.
The umbrella company is also involved with a company named E-Waste, which has no sales. Despite that, the men were allegedly able to increase the stock price of both Hometown International and E-waste through their manipulation by 939% and 19,900%, respectively.
The securities fraud and price manipulation charges have a maximum sentence of 20 years in prison and a $5 million fine. The wire fraud and money laundering charges each add another 20 potential years in prison, while the conspiracy to commit security fraud and conspiracy to manipulate security prices could add up to another five years in prison if the men are convicted.