A former stockbroker and ex-convict from North Carolina, James Patten, pleaded guilty to securities fraud in connection with a scheme to manipulate the stock of a company named Hometown International and inflate it to a market capitalization of $100 million despite having just one asset — which was a small neighborhood deli in southern New Jersey.
Patten, along with two other defendants, was accused of conspiring over eight years to artificially inflate the stock prices of Hometown International and another shell company, E-Waste, to create a misleading impression of demand for their shares.
The scheme, revealed in a Camden, New Jersey federal court, involved coordinated stock trading among a small number of accounts held by family members, friends, and associates. As a result, the stock prices of Hometown and E-Waste were inflated by an astonishing 939% and 19,900%, respectively.
Prosecutors outlined how Patten, along with Peter Coker Sr. and Peter Coker Jr., conspired to position the companies for reverse mergers with privately owned entities. While Patten has pleaded guilty, the Cokers have maintained their not-guilty plea. The Securities and Exchange Commission has also filed a lawsuit against all three defendants, with proceedings currently on hold pending the resolution of the criminal case.
Patten, aged 64, faces a maximum sentence of 20 years in prison and fines totaling $5.25 million. His guilty plea may intensify pressure on the Cokers to consider plea deals. Coker Sr. is currently free on bond, while Coker Jr. is in custody without bond after being arrested in Thailand in January.
The scheme came to light in 2022, more than a year after CNBC’s investigation into questionable connections between Hometown, E-Waste, and the individuals involved. The report highlighted the unusual stock prices given Hometown International’s modest deli as its sole asset. Both companies later disavowed their market capitalization and executed reverse mergers with other firms.
Patten’s attorney, Ira Sorkin, acknowledged Patten’s admission of wrongdoing and suggested that the media attention had fueled the case’s unusual scrutiny. Patten, scheduled for sentencing on April 23, may receive a lesser sentence based on federal sentencing guidelines. The attorney humorously commented on the media portrayal of the case, stating, “The press has come in and said the pastrami sandwich cost $100 million.”
(If Sorkin’s name sounds familiar, it’s because he also represented the late Ponzi scheme mastermind Bernie Madoff.)
While lawyers for the Cokers argue that no one suffered financial losses, prosecutors point to substantial consulting fees paid by Hometown and E-Waste, along with funding from uncharged individuals. Patten’s past legal troubles include a guilty plea in 2010 related to mail fraud and a prior regulatory action in which he was barred by FINRA for securities law violations.
Information for this story was found via CNBC, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
