Man Pleads Guilty In $100M South Jersey Deli Scheme

PAULSBORO, NJ — A man admitted to orchestrating a scheme that pushed a company's supposed value to more than $100 million, despite only owning a small South Jersey deli.

James Patten pleaded guilty Wednesday in federal court to multiple fraud charges. He and his co-defendants were accused of large-scale market manipulation through two companies — one of which owned Your Hometown Deli in Paulsboro

Patten, Peter Coker Sr., and Peter Coker were federally charged in September 2022 for their roles in the scheme.

Hometown International Inc. reached a market value of $113 million in February 2021, despite the deli totaling $35,748 in sales over the prior two years, according to CNBC.

Your Hometown Deli permanently closed in June 2022.

Nearly a decade ago, two New Jersey residents began the process of opening the deli. One of the individuals discussed the matter with Patten — a longtime friend — who suggested the creation of Hometown International, under which the deli would operate as a wholly owned subsidiary.

Unbeknownst to the deli owners, Patten and his associates used the umbrella company as a vehicle for a reverse merger to yield substantial profit for them, according to federal authorities.

Hometown International intended to go public in 2015, but the U.S. Securities and Exchange Commission (SEC) objected, believing it was a shell company. The company's leadership objected, saying it was operating a deli and investing and food preparation and service.

Patten, Coker Sr., and Coker Jr. "undertook a calculated scheme" to gain control of Hometown's shares in 2019 and transfer them to friends, family, and associates, officials said. In 2020, court documents show, the three men arranged for approximately 3.5 million shares to be transferred to entities in Macau, China, that Coker Jr. controlled — the shares were in other peoples' names.

Patten, Coker Sr., and Coker Jr. had the ability to trade shares on the mid-tier OTCQB marketplace because of how the shares were inflated, giving them greater ability to trade without price restrictions, officials said.

In 2020, Patten recruited another friend to control stock E-Waste, another publicly-traded company. He, Coker Sr., and Coker Jr. began artificially inflating E-Waste's stock prices and transferring shares to themselves and people they knew, officials said.

Patten pleaded guilty to securities fraud and conspiracy to commit securities fraud. The former carries maximum penalties of 20 years in prison and a $5 million fine. Punishment for the conspiracy offense can include up to five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense — whichever is greatest.

His sentencing is scheduled for April 23.