How did a deli in New Jersey become worth more than $100 million? Through fraud, U.S. prosecutors say, one spearheaded by three men with North Carolina connections.
Last week, the United States Attorney's Office indicted Peter Coker Sr. of Chapel Hill, his son Peter Coker Jr., and James Patten of Winston-Salem for artificially inflating the stock prices of two publicly traded companies. One of those companies, Hometown International Inc., held a deli in the Philadelphia suburb of Paulsboro, New Jersey, as its lone asset.
Now permanently closed, Your Hometown Deli "had annual revenue of less than $40,000," according to a complaint from the United States Securities and Exchange Commission. Yet at various points throughout 2021 and early 2022, stock in Hometown International sold for upwards of $14 per share, giving the company a nine-figure market capitalization.
Prosecutors say the three defendants boosted the value by engaging in illegal "coordinated trading events," including tactics like wash trading and match trading, which create misleading impressions of market activity around certain stocks. The defendants then allegedly sought to profit from Hometown's inordinate market cap by entering a reverse merger, in which a private company absorbs a public one.
In addition to Hometown, Patten and the Cokers are also accused of manipulating the stock of a shell company called E-Waste Corp., which reached a market capitalization of around $120 million despite earning no revenue.
Each defendant faces a dozen charges. On Sept. 26, Patten and Coker Sr. were arrested and appeared in the North Carolina Middle District Court. Both have been released on bail.
Coker Jr., who is based in Hong Kong, remains at large, the U.S. Attorney's Office of New Jersey told The News & Observer.
Besides the three defendants, the indictment also lists four unnamed co-conspirators, two of whom live in North Carolina (one in Greensboro and one in Raleigh.)
Another part of the alleged scheme involved enriching the Carrboro investment firm Tryon Capital, which Coker Sr. controlled. According to the indictment, Hometown International and E-Waste paid Tryon thousands of dollars each month in a "consulting agreement."
Tryon Capital is now listed as "dissolved," on the North Carolina Secretary of State's website. Neither Coker Sr. nor Patten could be reached for comment. The News & Observer also left messages for their lawyers but has yet to hear back.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
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