US officials announced fraud charges Monday against three men who orchestrated a $100 million scheme to inflate the market value of a company whose only revenue source was a small-town New Jersey delicatessen.
It is the latest twist in the odd saga of a Paulsboro, New Jersey deli owned by Hometown International, which saw its stock valuation soar in 2021 despite annual deli revenues of less than $40,000.
Now the company is the target of a criminal indictment by the Justice Department and civil charges by the Securities and Exchange Commission over the inflated $100 million market value.
The Justice Department charged James Patten and the father-son duo of Peter Coker Sr and Peter Coker Jr with a conspiracy in which they took control of two companies and their stock trading to artificially pump up equity valuations.
Hometown began selling shares on the OTC Marketplace in 2019 after which the three men took over the company, along with a second entity that traded on the OTC, E-Waste Corporation.
The trio shifted shares to shell companies to mask control, while transferring other shares to family members and friends whose log-in details they had obtained.
Having parties set up on both sides of the transaction, the men then used the accounts to perform a series of “match and wash trades” to pump up the value of Hometown by 939 percent and E-Waste by 19,900 percent, the Justice Department said.
“These tactics artificially inflated the price of Hometown International and E-Waste’s stock by giving the false impression that there was a genuine market interest in the stock,” said a DOJ press release.
Patten and Coker Sr were arrested Monday and scheduled to appear in federal court in North Carolina, while Coker Jr, who is based in Hong Kong, remains at large, DOJ said. — Agence France-Presse