Court hearing for key figure in alleged stock fraud at Your Hometown Deli in Paulsboro
PAULSBORO – A man accused of using a local deli to commit securities fraud is back in the United States after being arrested in Thailand.
Peter Coker Jr., 53, and two accomplices allegedly took control of Your Hometown Deli, a Mantua Avenue sandwich shop, as part of a “large-scale market manipulation scheme,” according to the U.S. Attorney’s Office for New Jersey.
Also charged in the case are Coker's father, Peter Sr., and James Patten, both of North Carolina.
The men similarly exploited a shell company called E-Waste Corp., the federal prosecutor’s office alleged in a statement.
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The scheme sharply inflated the share price of Hometown International, a parent firm with revenues from the deli of less than $40,000 a year, authorities said.
Your Hometown Deli stock price soared
The price rose from about $1 per share in October 2019 to nearly $14 per share by April 2021, “leading to a grossly inflated market capitalization of $100 million,” the U.S. Securities and Exchange Commission said in bringing a separate civil action in September 2022.
According to the U.S. Attorney’s Office, once the defendants gained control of the companies’ stock, they transferred millions of shares to friends, family and associates. They allegedly used the stock recipients' accounts for coordinated transactions, known as match and wash trades, with Hometown International and E-Waste Corp. stock on both sides of the deal.
This boosted the stocks' value “by giving the false impression that there was a genuine market interest,” the statement said.
It claimed the scheme, conducted from 2014 through September 2022, boosted Hometown International’s stock price by more than 900 percent. The value soared by almost 20,000 percent for E-Waste’s stock.
How Your Hometown Deli alleged scheme began
According to the U.S. Attorney’s Office, the deli’s founder in 2014 discussed his planned business with Patten, a long-time friend.
Patten suggested the creation of a stock-owned parent firm, Hometown International, setting the stage for the alleged scheme.
Court records indicate the deli’s founder was Paul Morina, principal and wrestling coach at Paulsboro High School. He was not aware of the defendants’ plan, according to the U.S. Attorney’s Office, which alleged in an indictment that Patten "preyed on his friends."
The defendants benefitted from lucrative consulting contracts with Homestead, the indictment says.
It contends they also planned to inflate Hometown's stock price so they could eventually sell the shell company "at a significant profit" through a reverse mortgage.
A reverse mortgage allows a private firm to achieve stock ownership through the purchase of a publicly held company like Hometown International.
Hometown merged last year with a privately held California firm, Makamer Inc., in a transaction that did not include the deli.
Makamer said the deli closed after the merger and that it had sold the business for $15,000, according to an August 2022 filing with the SEC.
The deli's phone number was not in operation Thursday.
Unwanted spotlight
Hometown International drew attention in April 2021, when a hedge fund operator derided its $100 million stock valuation. The improbable figure showed a lack of regulatory oversight, asserted David Einhorn of Greenlight Capital.
In a subsequent filing with the U.S. Securities and Exchange Commission, Hometown International said it knew “of no basis to support the company's stock price, based upon its revenue or assets.”
The SEC’s suit is pending in Camden federal court.
Coker Jr. was held without bail Wednesday after an appearance on the criminal charges in Newark federal court.
His attorney declined to comment.
Coker Sr. and Patten were previously arrested and have been released pending trial.
A 12-count indictment in September 2022 accused the men of securities fraud, wire fraud, and money laundering. They also are charged with conspiring to commit securities fraud and to manipulate stock prices.
The charges are only allegations. The Cokers and Patten have not been convicted in the case.
Jim Walsh is a senior reporter with the Courier-Post, Burlington County Times and The Daily Journal.
This article originally appeared on Cherry Hill Courier-Post: Your Hometown Deli: Securities fraud charges heading to court
