North Carolina man pleads guilty to orchestrating $100 million deli fraud
A Winston-Salem resident pleaded guilty last week to securities fraud in the well-publicized case of a $100 million deli.
On Dec. 20, 64-year-old James Patten admitted he helped artificially inflate the values of two publicly traded companies — one of which, Hometown International, held a single asset. It was a deli in suburban Philadelphia that never generated more than $40,000 in annual revenue, regulators say.
Nonetheless, at various points in 2021 and 2022, Hometown International’s stock rose above $14 a share, giving the company with a single deli a market value north of $100 million.
Patten admitted he and two co-defendants, Peter Coker Sr. of Chapel Hill and his son Peter Coker Jr., coordinated trading events called wash trading and match trading to mislead the public about Hometown’s stock activity. The defendants then sought to profit from the exorbitant market capitalization by entering a reverse merger, in which a private company absorbs a public one, according to the United States Attorney’s Office District of New Jersey.
According to Patten’s plea, the defendants also manipulated the stock of a shell company called E-Waste Corp., which reached a market capitalization of around $120 million despite earning no revenue.
Patten pleaded guilty to one count of securities fraud and another count of conspiracy to commit securities fraud. He was initially charged with 12 counts overall. The securities fraud charge carries a maximum penalty of 20 years in prison and a $5 million fine.
He is scheduled to be sentenced on April 23.
This isn’t Patten’s first fraud conviction. In 2010, he pleaded guilty to one count of mail fraud for misusing an investor’s funds and sending them a fake account statement.
Neither Coker Sr. or Coker Jr. have entered pleas. The father remains free on bond while his son is being held without bond after being arrested as a fugitive in Thailand earlier this year.
According to prosecutors, another part of Patten and the Cokers’ scheme involved enriching the Carrboro investment firm Tryon Capital, which Coker Sr. controlled. According to the indictment in September 2022, Hometown International and E-Waste paid Tryon thousands of dollars a month in a “consulting agreement.”
Tryon Capital is now listed as “dissolved,” on the North Carolina Secretary of State’s website. And the deli is closed.
Open Source
Do you enjoy Triangle tech news? Subscribe to Open Source, The News & Observer's weekly technology newsletter and look for it in your inbox every Friday morning. Sign up here.
