|
Getting your Trinity Audio player ready...
|
By: Serach Nissim
A father-and-son duo of fraudsters pleaded guilty on Thursday for a brazen $100 million stock manipulation scheme. As reported by CNBC, the scam involved a small New Jersey deli whose parent company had a grossly inflated market capitalization of $100 million.
Peter Coker Sr., 82, and his former fugitive son Peter Coker Jr., 56, confessed to boosting the stock price of Hometown, whose sole asset for years was Your Hometown Deli in Paulsboro, as well as shares of a shell company named E-Waste. Both father and son are scheduled to be sentenced next spring in the case in U.S. District Court in Camden, NJ, federal prosecutors said.
As reported by the NY Post, Coker Jr., who had formerly lived in Hong Kong, was arrested last January at a hotel in Thailand, near Surin Beach in Phuket, after running from the law for close to six months. A third defendant, James Patten, had been arrested in September 2022, along with Coker’s father, after the feds charged them with a dozen charges for fraud. Patten had pleaded guilty last December to the same charges of securities fraud and conspiracy to commit securities fraud in connection with the company, which was formerly known as Hometown International. The three scammers allegedly “artificially” inflated the stock price of Hometown, in which the father was a major shareholder, by 939% despite the tiny deli having under $40,000 in annual revenue.
The stock for E-Waste was also falsely inflated by roughly 19,900%, prosecutors said. The defendants used fake trades to make it appear as though shares of both firms were hot with investors, in the scam which spanned some eight years beginning in 2014. The scheme included a so-called reverse merger between Hometown and a foreign firm, which allowed the private company to go public by merging with a firm that’s already listed and basically taking the place of the pre-existing “shell.” This has become an easy way for companies to get listed, while bypassing the usually scrutiny of an IPO and the normal disclosure requirements.
In April 2021, the company was delisted off of OTC Markets Group, the exchange where shares of Hometown International were traded, when a renowned short-seller wrote about the very suspicious valuation. Per the Post, David Einhorn, the billionaire investor and co-founder of Greenlight Capital, had penned a letter to his clients noting Hometown’s valuation as an example of regulatory failure, and flagging the stock as a “buyer beware”. “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.”
Because of the letter, later that month, the management of Hometown International disavowed the company’s valuation, per the 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.
Lawyers for the Cokers made a deal with federal prosecutors in which both sides agreed to request the same range of prison time at sentencing for each the father and son, CNBC reported. For the 82-year-old Coker Sr., the range is zero to two years in prison, and for the 56-year-old son, the range is 30 months to 50 months in jail. Their agreement does not bind the judge to adhere to those ranges in his sentencing.
