New Jersey Deli Scheme Leads to Plea of Guilty with Securities Fraud
A man involved in a brazen plot to manipulate the stock price of the parent company of a New Jersey deli pleaded guilty Wednesday to securities fraud.
James T. Patten, 64, of North Carolina, admitted to orchestrating a series of deceptive transactions in an apparent attempt to enrich himself and two co-defendants in U.S. District Court in Camden, N.J.
Mr. Patten faces a prison sentence of up to 20 years and a fine of up to $5 million for securities fraud. He also pleaded guilty to conspiracy to commit securities fraud, which carries a maximum penalty of five years in prison and a fine of up to $250,000.
Mr. Patten’s attorney, Ira Lee Sorkin, said in an interview Wednesday that the attention to the case was “overblown beyond any perception — that this was approximately a $100 million fraud involving a delicatessen.” He said prosecutors had “made no mention” of “ill-gotten gains.”
The scheme began around 2014, prosecutors said, when Mr. Patten helped open Your Hometown Deli in Paulsboro, N.J. The store sold Philadelphia cheesesteak sandwiches, groceries and other prepared foods, according to regulatory filings.
Around 2019, Mr. Patten and two associates – Peter Coker Sr. and Peter Coker Jr. — “a calculated scheme” to gain control of the deli’s parent company, Hometown International, the U.S. attorney’s office in New Jersey said.
The group used other people’s accounts to make coordinated trades involving shares of Hometown International and E-Waste, another company the three men controlled. This created “the false impression that there was genuine market interest in the stock,” causing its price to rise, the US Department of Justice said.
The plan caught the attention of traders in 2021 when Hometown International’s value soared to $113 million, even though the small deli only earned $13,976 in revenue.
“The pastrami must be great,” David Einhorn, a hedge fund manager, wrote in a memo to investors after noticing the rising price and issuing a warning about frothy stock market conditions.
E-Waste’s stock was inflated by 19,900 percent, the U.S. attorney’s office said.
News of Your Hometown Deli’s skyrocketing value hit headlines around the world as investors warned it could be a scam.
The verdict is scheduled for April 23. The eldest Mr Coker, who was arrested in late 2022, is awaiting trial. His son was arrested in January.