Wire flash
FinanceJames Patten sentenced to 21 months in $100M New Jersey deli stock fraud
Editorial responsibility
- No named human review is recorded for this page.
- Source reporting is collected, normalized, translated or condensed automatically when needed.
- Automatically published source-backed update
James Patten, 67, was sentenced to 21 months in prison for his role in a brazen stock manipulation scheme that artificially inflated the market capitalization of Hometown International, a company owning a small New Jersey deli, to $100 million. Patten pleaded guilty to securities fraud in U.S. District Court in Camden, New Jersey. He and co-conspirators Peter Coker Sr. and Peter Coker Jr. admitted to manipulating the stock prices of Hometown International and a shell company, E-Waste, by 939% and 19,900% respectively, to make them attractive for reverse mergers. Patten, who had a prior mail fraud conviction, had requested no prison time, while prosecutors sought 12-18 months. The scheme was uncovered after hedge fund manager David Einhorn highlighted the deli's bizarre valuation in a 2021 letter.
Source report
Courtroom sketch of James Patten, left, and attorney Ira Sorkin at N.J. District Court in Camden, N.J., Oct. 11, 2022 Source: Elizabeth Williams
James Patten, the central figure in a brazen stock manipulation scheme that inflated a small, money-losing New Jersey deli's parent company to a $100 million market capitalization, was sentenced Tuesday to 21 months in prison.
Key Developments
- Patten, 67, pleaded guilty to securities fraud in U.S. District Court in Camden, New Jersey.
- He had asked Judge Christine O'Hearn to impose no prison time in the deli fraud case.
- The U.S. Attorney's Office in New Jersey had requested a sentence of 12 to 18 months.
- Patten previously served 27 months in prison for an unrelated mail fraud conviction.
Co-Conspirators Already Sentenced
Patten's co-conspirators, Peter Coker Sr. and Peter Coker Jr. , have already completed their prison sentences of six months and 40 months, respectively.
The Scheme
Patten and the Cokers admitted to plotting to artificially drive up the share prices of:
- Hometown International — the company that owned Your Hometown Deli in Paulsboro, New Jersey
- E-Waste — a shell company
Through manipulated trading, the stock prices were inflated by:
- 939% for Hometown International
- 19,900% for E-Waste
The goal of the scheme was to make both companies more attractive candidates for reverse mergers with private companies seeking to go public.
Origins of the Scheme
In 2014, Patten suggested creating Hometown as an umbrella corporation to a high school wrestling teammate, Paul Morina, and another person who were discussing opening a deli in Paulsboro. Morina, a high school principal and renowned wrestling coach, and the other deli owner were unaware of Patten's manipulation scheme, authorities said.
Investigation and Charges
Charges were filed against Patten and the Cokers in September 2022, more than a year after CNBC detailed questionable connections between Hometown and E-Waste, Patten's prior criminal and civil issues, and consulting deals benefiting the two men. Your Hometown Deli closed earlier in 2022.
CNBC's reporting was sparked by a client letter from hedge fund manager David Einhorn in April 2021, which highlighted Hometown International's bizarre stock valuation given its single, meager asset. "The pastrami must be amazing," Einhorn wrote.
This is breaking news. Please check back for updates.
Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.
Source
US Top News and AnalysisWestern
Part of this Story
Federal Prosecutors Seek Reduced Sentence for $100M New Jersey Deli Fraudster