More than three years after a little hole-in-the-wall deli in South Jersey became the unlikely focus of an international investment scam stretching all the way to Hong Kong and Thailand, the father-and-son team who orchestrated the complicated financial scheme pleaded guilty in a federal courtroom on Thursday.
Peter Coker, Sr., 82, of Chapel Hill, North Carolina, and his son, Peter Coker, Jr., 56, formerly of Hong Kong, pleaded guilty before U.S. District Judge Christine P. O’Hearn in Camden to securities fraud and conspiracy charges.
They each face up to 20 years in prison and a $5 million fine when they are sentenced next year.
The bizarre case came to light in 2021 when the Hometown Deli in Paulsboro in Gloucester County about nine miles southwest of Philadelphia — a place known more for its burgers, fries, and hoagies than the next big bet on Wall Street — turned up in public filings that struck financial experts as too good to be true.
In a filing with the U.S. Securities and Exchange Commission, the corporation — formed in 2014 in Nevada — spoke of its new “delicatessen concept” called Your Hometown Deli that was to feature “home-style” sandwiches, food items, and groceries “in a casual and friendly atmosphere.”
The small sandwich shop in subsequent public reports reported less than $40,000 in annual revenue from selling cheesesteaks and Wiz fries. Yet its parent company, Hometown International — which owned nothing but the deli — was soon valued at more than $100 million.
“The pastrami must be amazing,” wrote hedge fund manager David Einhorn, who first drew attention to the company’s valuation in a shareholder newsletter.
In actuality, there was no pastrami on the menu board.
But added to the mystery was the disclosure that the deli had been owned by Paul Morina, a famed wrestling coach at Paulsboro High School, who on paper became the CEO of Hometown International, which bought out the deli. Morina was abruptly forced out in May 2021.
According to the U.S. Attorney’s office, it was all an elaborate ruse by the Cokers to manipulate securities prices through a pattern of coordinated trading, creating false impressions of supply and demand for securities that were worthless.
Officials said that James Patten, a friend and former classmate of Morina, had convinced him to put the deli under the control of Hometown International, officials said. After Hometown International was formed, prosecutors said it was put in play as a vehicle for a reverse merger, artificially inflating both its price and a related company, E-Waste, through manipulative trading, according to the Securities and Exchange Commission.
Hometown International began selling shares in October 2019 on the OTC Marketplace and shortly thereafter, Patten and the Cokers gain control of Hometown International’s management and its shares from the deli owners, along with seeking to gain control of E-Waste Corporation’s stock and management. Prosecutors said they then arranged for the transfer of millions of shares of stock to a number of entities controlled by Coker Jr., in an effort to mask their control of the shares.
In addition, they also transferred shares to family members, friends, and associates, using those accounts to make a number of coordinated trades, which 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 prosecutors.
Hometown’s stock price rose 939% and E-Waste stock rose 19,900%, according to the government.
Patton pleaded guilty last year to securities fraud and conspiracy to commit securities fraud.
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Ted Sherman may be reached at tsherman@njadvancemedia.com. Follow him on X @TedShermanSL.
