James Patten sentenced to 21 months in prison over $100 million New Jersey deli stock fraud
James Patten, the former stockbroker behind the infamous stock manipulation scheme that turned a small, money-losing New Jersey deli into a company valued at nearly $100 million, has been sentenced to 21 months in federal prison.Patten, 67, was sentenced on Tuesday by U.S. District Judge Christine O’Hearn in Camden, New Jersey, bringing one of Wall Street’s most unusual securities fraud cases to a close. According to CNBC, Patten had asked the court to spare him prison, but the judge rejected the request, citing his prior fraud conviction and repeated criminal conduct.“This is his idea,” Judge O’Hearn said while handing down the sentence, noting that Patten launched the scheme while still on supervised release from an earlier federal fraud conviction.
Judge cites repeat fraud conviction
The North Carolina resident had previously served 27 months in prison in another federal fraud case and still owed restitution when he became involved in the deli stock manipulation scheme.In addition to the 21-month prison sentence, Patten was ordered to serve three years of supervised release and pay approximately $5 million in restitution.Before sentencing, Patten apologized to the court.“I stand today before you to apologize, to take full responsibility for my actions,” he said, becoming emotional as he apologized to his family and young wrestlers he had coached.“There is no excuse,” Patten added.After leaving court, he declined further comment.
How a small deli became a $100 million company
Patten and his co-conspirators, Peter Coker Sr. and Peter Coker Jr., admitted to manipulating the share prices of Hometown International, which owned Your Hometown Deli in Paulsboro, New Jersey, and another shell company called E-Waste.Prosecutors said the scheme artificially inflated Hometown International’s stock price by 939% and E-Waste’s by nearly 19,900%.The inflated valuations were intended to make the companies attractive for reverse mergers, allowing private businesses to go public through the shell companies.Despite owning little more than a neighborhood deli that was losing money, Hometown International’s market capitalization soared to around $100 million, drawing widespread attention on Wall Street.
Scheme began years before investigation
According to prosecutors, Patten first suggested creating Hometown International in 2014 after learning that his former high school wrestling teammate Paul Morina and another individual planned to open a deli in Paulsboro.Authorities said Morina, a respected high school principal and wrestling coach, and the deli’s co-owner were unaware of Patten’s plan to manipulate the company’s shares.Patten became the last of the three defendants in the case to be sentenced. Peter Coker Sr. received a six-month prison sentence, while Peter Coker Jr. was sentenced to 40 months.
Investigation helped expose the case
Federal charges against Patten and the Cokers were filed in September 2022, more than a year after CNBC published an investigation detailing unusual links between Hometown International, E-Waste, Patten’s prior legal troubles and consulting arrangements involving the companies.The story gained national attention after hedge fund manager David Einhorn highlighted the company’s extraordinary valuation in a 2021 investor letter.“The pastrami must be amazing,” Einhorn famously wrote, mocking the fact that a single, struggling deli had somehow become a company worth nearly $100 million.Your Hometown Deli closed in 2022, but the case remains one of the most bizarre examples of stock market manipulation in recent years.
