Prosecutors want $100 million NJ deli SEC case postponed

Hometown Deli, Paulsboro, NJ

Mike Calia | CNBC

Federal prosecutors in New Jersey want the Securities and Exchange Commission to postpone its civil lawsuit against the alleged masterminds behind a A $100 million fraudulent scheme involving a small-town delicatessen so that it does not hamper their ongoing criminal case.

New Jersey district attorneys filed a motion on Wednesday saying the SEC case ‘substantially’ overlaps with their ongoing criminal case and that the civil case should be postponed until litigation, including a trial potential, is over, according to court records.

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Postponing the civil case would “preserve the integrity” of ongoing prosecutions by preventing defendants from seeing the extent of the government’s evidence against them, federal prosecutors in the filing argued.

During the discovery phase of civil and criminal cases, defendants have the opportunity to see the evidence that will be used against them at trial, but they have access to a lot more documents in civil cases because the limits are wider.

The SEC and the suspects’ attorneys consented to the request, which is common in such cases. Judge Christine O’Hearn has yet to rule on the matter.

A conference call is scheduled in the criminal case for December 14, but it is expected to be mostly procedural and allow prosecutors and defense attorneys to update the judge on the status of the case.

In September, James Patten and father-son duo Peter Coker Sr. and Peter Coker Jr. were arrested and accused of securities fraud for allegedly orchestrating a scheme that inflated the prices of two publicly traded companies, Hometown International and E-Waste Corp, a shell company.

Courtroom sketch of James Patten, left, and attorney Ira Sorkin at the NJ District Court in Camden, NJ on October 11, 2022

Source: Elizabeth Williams

makamera bioplastic startup, merged with Hometown International, earlier this year.

Even though Hometown International’s only asset was Your Hometown Deli, a now closed small sandwich shop in Paulsboro, New Jersey, which had less than $40,000 in annual revenue, the trio used manipulative trading to inflate its market capitalization to more than $100 million, according to prosecutors. .

The scheme began when Patten convinced the owner of Your Hometown Deli, esteemed local wrestling coach and high school principal Paul Morina, to place the restaurant under the control of Hometown International, an umbrella corporation they created, according to the prosecutors.

“Unbeknownst to the deli owners, almost immediately after the formation of Hometown International, Patten and his associates began positioning Hometown International as a vehicle for a reverse merger that would yield them substantial profits,” prosecutors said earlier in A press release.

“Soon after, Patten, Coker Sr. and Coker Jr. embarked on a calculated scheme to take control of the management of Hometown International and its stock from deli owners.”

Peter Coker Sr. and his wife, Susan Coker, at the NJ District Court in Camden, NJ on October 11, 2022

Source: Jerry Frasier and Vinny Castaldo

The men have concocted a similar plan to take control of electronic waste. The tactic “artificially inflated” the stock values ​​of Hometown International and E-Waste by 939% and 19,900%, respectively, prosecutors said.

Coker Sr. and Patten have pleaded not guilty.

Patten’s attorney, Ira Sorkin, the top trial attorney who once represented notorious Ponzi schemer Bernie Madoff, did not comment when asked if the case should go to trial.

Coker Sr. attorney Marc Agnifilo, who previously defended “pharmaceutical brother” Martin Shkreli and disgraced film producer Harvey Weinstein, could not be reached. It is unclear whether Hong Kong-based Coker Jr. has an attorney, and he remains a fugitive. Morina did not respond to a request for comment.

Patten, Coker Sr. and Coker Jr. have been charged just over a year after the dodgy Hometown International stock was revealed by hedge fund manager David Einhorn in a letter to clients warning of the dangers facing retail investors.

“Someone pointed us to Hometown International (HWIN), which owns a single grocery store in rural New Jersey…HWIN reached a market capitalization of $113 million on Feb. 8. The major shareholder is also the CEO/CFO /Treasurer and a principal, who also happens to be the wrestling coach at the neighboring high school deli,” Einhorn said in the April 2021 letter. “The pastrami must be amazing.”

After the announcement of the indictment, he joked on Twitter: “I guess the Pastrami was not so good.”

The $100 million company that owns just one deli in New Jersey with $35,000 in sales over the past two years

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