Homeland Deli, Paulsboro, NJ
Mike Calia | CNBC
Federal prosecutors in New Jersey are asking the Securities and Exchange Commission to delay their civil case against plaintiffs behind a $100 million fraud scheme involving a small-town madman so it doesn’t interfere with their ongoing criminal case.
New Jersey prosecutors filed a motion Wednesday, saying the SEC’s case overlaps “substantially” with their ongoing criminal case and that the civil matter should be stayed pending the completion of the civil case, including a potential trial.
Postponing the civil case would “protect the integrity” of the ongoing prosecution by preventing the defendants from seeing the extent of the government’s evidence against them, federal prosecutors argued in a filing.
During the discovery phase of civil and criminal cases, defendants have access to evidence that will be used against them in court, but because the restrictions are broader, they have access to more material in civil cases.
The SEC and the defendants’ attorneys agreed to the request, which is common in such cases. Judge Christine O’Hearn has yet to rule on the matter.
A conference call in the criminal case is set for Dec. 14, but it is expected to be largely procedural and an opportunity for prosecutors and defense attorneys to update the judge on the state of the trial.
In September, James Patten and father-son duo Peter Coker Sr. and Peter Coker Jr. were arrested and charged with securities fraud for masterminding a scheme to inflate 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, October 11, 2022
Source: Elizabeth Williams
Makamera bioplastics startup that merged with Hometown International earlier this year.
Prosecutors allege that while Hometown International’s only asset was a small sandwich shop called Your Hometown Deli in Paulsboro, New Jersey, with less than $40,000 in annual revenue, the trio used manipulative trading to inflate its market capitalization by more than $100 million. .
Prosecutors allege that Patten started after he convinced the owner of Your Hometown Deli, Paul Morina, a respected local high school wrestling coach and principal, to put the restaurant under the control of Hometown International, which they founded.
“Unbeknownst to the deli owners, shortly after the formation of Hometown International, Patten and his associates began to position Hometown International as a vehicle for a reverse merger that would bring them substantial profits,” prosecutors said in an earlier news release.
“Shortly thereafter, Patten, Coker Sr. and Coker Jr. engaged in a calculated scheme to wrest control of Hometown International’s management and stock from the confectionary owners.”
Peter Coker Sr. and wife Susan Coker, Camden, NJ on October 11, 2022 in NJ District Court
Source: Jerry Frasier and Vinny Castaldo
Men came up with a similar scheme to take control of E-Waste. Prosecutors said the tactic “artificially inflated” the stock values of Hometown International and E-Waste by 939% and 19,900%, respectively.
Coker Sr. and Patten have pleaded not guilty.
Patten’s attorney, Ira Sorkin, a top litigator who once represented infamous Ponzi scheme fraudster Bernie Madoff, would not comment when asked if the case would go to trial.
Mark Agnifilo, a lawyer for Joker Sr., has previously disgraced “pharmabro” Martin Shkreli and movie producer Harvey Weinstein. It is unclear whether Hong Kong native Joker Jr. has a lawyer and he remains a fugitive. Morina did not respond to a request for comment.
Patten, Coker Sr. and Coker Jr. were indicted a little more than a year after Hometown International’s questionable holdings were revealed in a letter by hedge fund manager David Einhorn warning clients about the dangers facing retail investors.
“Someone put us in touch with Hometown International (HWIN), a single deli owner in rural New Jersey… HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and Director. He also happens to be the high school wrestling coach next door to the deli,” Einhorn said in an April 2021 letter. “The pastrami should be amazing.”
After news of the indictment spread, He wrote sarcastically on Twitter: “I guess the Pastrami wasn’t that great.”