Feds Crack $100 Million Dollar Deli Dirty Dealing Drama

Hometown International, Inc.
US ˙ OTCPK

Feds Crack $100 Million Dollar Deli Dirty Dealing Drama

Feds say the trio's scam broke just about every relevant law on the books

Feds Crack $100 Million Dollar Deli Dirty Dealing Drama
2022-09-28 24:31
US

Remember that sketchy deli worth hundreds of millions of dollars on the market, and no one could figure out what was happening?

The U.S. Department of Justice remembers, and it said on Tuesday that it indicted three men for large-scale market manipulation of the deli stock and one other.

Newark US Attorney Philip Sellinger Tuesday charged James Patten, 63, of Winston-Salem, North Carolina; Peter Coker Sr., 80, of Chapel Hill, North Carolina; and Peter Coker Jr., 53, of Hong Kong, each on a dozen counts of conspiracy to commit securities fraud, securities fraud, and conspiracy to manipulate securities prices. Patten is also charged with four counts of manipulation of securities, four counts of wire fraud, and one count of money laundering.

Sellinger said Patten and Coker Sr. would appear before U.S. Magistrate Judge L. Patrick Auld in federal court in the Middle District of North Carolina. They will appear in court in the District of New Jersey at a date to be determined. Coker Jr. remains at large.

The feds allege that Patten, Coker Sr., and Coker Jr. conspired to manipulate share prices, creating inaccurate information and intentionally misleading the market.

They say the defendants targeted Hometown International Inc. (US:HWIN) and E-Waste Corp. (US:EWST), which both trade on the OTC Link Alternative Trading System, also known as the OTC Marketplace.

As described by the indictment, the trio hoped to gain control of the shares and management. Eventually, the government said the men wanted to involve the companies in reverse mergers and to profit by selling their shares.

Now comes the famous deli deal.

According to the court filings, around 2014, two New Jersey residents, one a friend of Patten, opened the store in Paulsboro, New Jersey. Patten convinced his friend, according to the government, to create an umbrella corporation called Hometown International, which would operate the deli as a wholly owned subsidiary.

Patten and his codefendants allegedly then started scheming to gain control of Hometown and, without informing the deli owners, moved to find a reverse merger partner.

Hometown began selling shares on the OTC Marketplace in the fall of 2019. The trio then allegedly “undertook a calculated scheme to gain control of Hometown International’s management and its shares from the deli owners,” the Justice Department claimed. Patten, Coker Sr., and Coker Jr. did the same to gain control of E-Waste Corporation, the indictment alleged.

When the trio had control of the two companies’ shares, they began efforts to hide their ownership, parceling out millions of shares to Coker Jr.-run enterprises.

The defendants also used family members, friends, and associates’ accounts, unbeknownst to their owners,  hacking into them with stolen passwords and manipulating share prices with wash trades and other nefarious activity.

Wash trades artificially lifted Hometown International and E-Waste’s shares stock, “giving a false impression that there was a genuine market interest.

The Justice Department said the scheme drove Hometown’s shares up 939%.

They managed to goose E-Waste shares by almost 20,000%

The defendants each face up to 20 years in prison and a $5 million fine for securities fraud. The conspiracy charges against each defendant carry up to 20 years in prison and a $250,000 fine, or twice the greater of the offense’s gain or loss.

The U.S. Securities and Exchange Commission filed a civil complaint Tuesday in New Jersey charging the three based on the allegations underlying the market manipulation scheme.

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