The father-and-son fraudsters behind a $100 million stock manipulation scheme involving a New Jersey deli pleaded guilty on Thursday.
Peter Coker Sr., 82, and his former fugitive son Peter Coker Jr., 56, confessed to helping boost the stock price of Hometown, whose sole asset for years was Your Hometown Deli in Paulsboro, as well as shares of a shell company E-Waste.
The pair will be sentenced next spring in US District Court in Camden, NJ, federal prosecutors said.
Coker Jr., a former Hong Kong resident, was picked up last January at a hotel near Surin Beach in Phuket Thailand, after being on the lam for nearly six months.
A third man, James Patten, was arrested with Coker’s father in September 2022 after the feds slapped them with a dozen charges for fraud. He pleaded guilty in last December.
Coker Jr. and his co-conspirators managed to “artificially” inflate the stock price of Hometown, in which his father was a major shareholder, by 939% despite the deli having less than $40,000 in annual revenue.
E-Waste’s stock was also falsely boosted by approximately 19,900%, according to prosecutors.
The trio used fake trades to create the impression that shares of both firms were hot with investors over eight years starting from 2014.
The scheme included a so-called reverse merger between Hometown and a foreign firm, which would have given the latter access to US capital.
Such deals allow a private company to go public by merging with a firm that’s already listed and essentially take the place of the pre-existing “shell.”
The process has been criticized for, among other matters, allowing companies to bypass the intense scrutiny and disclosure requirements of a traditional initial public offering.
OTC Markets Group, the exchange where shares of Hometown International were traded, delisted the company in April 2021 shortly after a letter from renowned short-seller David Einhorn surfaced.
He flagged Hometown’s massive valuation as an example of regulatory failings in a letter to his clients.
“The pastrami must be amazing,” Einhorn wrote. “Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators — who are supposed to be protecting investors — appear to be neither present nor curious.”
The exchange later added a “Buyer beware” warning on shares that spur suspicions of questionable activity.
Later that month, the management of Hometown International disavowed the company’s valuation, according to SEC filings.
“Management is aware of no basis to support the company’s stock price, based upon its revenue or assets,” the company said in an April 30, 2021 statement.
Paul Morina, a local high school principal and renowned wrestling coach in the area, was removed as the company’s CEO after a vote by majority shareholders in May 2021.
Peter Coker Sr. had previously been sued for allegedly hiding money from creditors and business-related fraud. He denied wrongdoing in those cases, one of which settled out of court in North Carolina.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
