A man involved in a brazen plot to manipulate the stock price of the parent company of a New Jersey delicatessen pleaded guilty Wednesday to securities fraud.
James T. Patten, 64, of North Carolina, admitted to orchestrating a series of deceptive exchanges with the apparent purpose of enriching himself and two co-defendants in U.S. District Court in Camden, New Jersey .
Mr. Patten faces up to 20 years in prison and a fine of up to $5 million for securities fraud. He also pleaded guilty to a charge of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a fine of up to $250,000.
Mr. Patten’s lawyer, Ira Lee Sorkin, said in an interview Wednesday that the attention to the case “was exaggerated beyond perception – that this was a fraud of approximately $100 million involving a delicatessen.” He said prosecutors made “no mention” of “ill-gotten gains.”
The scheme began around 2014, prosecutors said, when Mr. Patten helped open His Hometown Deli in Paulsboro, New Jersey. The store sold Philadelphia cheesesteak sandwiches, groceries and other ready-to-eat meals, according to regulatory filings.
Around 2019, Mr. Patten and two associates — Peter Coker Sr. and Peter Coker Jr. — “undertook a calculated plan” to take control of the grocery store’s parent company, Hometown International, the U.S. attorney’s office said from New Jersey.
The group used accounts belonging to others to make coordinated trades using the shares of Hometown International and E-Waste, another company controlled by the three men. This gave “the false impression that there was genuine market interest in the stock,” which drove up its price, the U.S. attorney’s office said.
The project caught the attention of retailers in 2021, when Hometown International’s value soared to $113 million, even though the small grocery store only made $13,976 in revenue.
“Pastrami must be amazing,” David Einhorn, a hedge fund manager, wrote in a note to investors after noticing the price surge 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 sky-high value made headlines around the world as investors warned it could be a scam.
Sentencing is scheduled for April 23. The eldest, Mr. Coker, arrested at the end of 2022, is awaiting trial. His son was arrested in January.
