Man pleads guilty in scheme to inflate securities value of N.J. deli to $100 million
James Patten and two other men allegedly manipulated shares of a holding company they created for Hometown Deli in Paulsboro.
A North Carolina man admitted in federal court Wednesday to manipulating shares of a holding company created for a South Jersey delicatessen — pushing the value of the tiny public company as high as $100 million in 2021, prosecutors said.
James Patten, 64, of Winston-Salem, pleaded guilty to securities fraud and conspiracy to commit securities fraud before U.S. District Judge Christine P. O’Hearn in Camden.
Sentencing for Patten is scheduled for April 23, and he faces a maximum penalty of 20 years in prison and a $5 million fine for the securities fraud count, and five years in prison and a $250,000 fine or twice the financial gain or loss from his criminal activity for the conspiracy count.
In September 2022, Patten was indicted along with the father-son duo of Peter Coker Sr. and Peter Coker Jr. in a case alleging that the trio befriended Paul Morina, the owner of Hometown Deli in Paulsboro, Gloucester County, and recruited their associates to bid up the sandwich shop’s share price illegally, then cash out at an artificially inflated profit.
The three men allegedly took control of the shares of the deli’s holding company, Hometown International, over a period of several years. Prosecutors alleged that the trio bought shares with the intent to dump them at much higher prices.
Patten and Coker Sr. were arrested last year. Coker Jr. was arrested earlier this year in Thailand, where he lived.
Hometown Deli attracted attention in 2021 when its stock price skyrocketed from $1.25 in November 2019 to $14.50 two years later, earning the company its outsized paper value.
Morina, the deli’s owner, was well known in the community as a Paulsboro High School wrestling coach.
Patten convinced Morina to put the deli into a holding company, and then Patten proceeded to manipulate the stock price without Morina’s knowledge, prosecutors said.
The deli’s shell company masked a money-losing operation. Hometown Deli closed last year.
Morina was not charged in the criminal case.
Prosecutors alleged that Patten and the Cokers also manipulated shares of another publicly traded company, E-Waste Corp.
Criminal charges remain pending against the Cokers.