In a shocking turn of events, a former stockbroker named James Patten has pleaded guilty to securities fraud charges in connection with manipulating the stock of Hometown International, a company that only owned a single money-losing deli in southern New Jersey. Patten also admitted to conspiring with two other individuals to manipulate the share price of a shell company called E-Waste, which had no tangible assets. This article delves into the details of the case, shedding light on the fraudulent actions that took place and the potential repercussions for those involved.
Prosecutors have revealed that Patten, along with Peter Coker Sr. and Peter Coker Jr., conspired over an eight-year period to artificially increase the stock prices of both Hometown International and E-Waste. Their goal was to create a false impression of demand for the companies’ shares and position them for reverse mergers with privately owned companies. Utilizing a pattern of coordinated stock trading between a select few accounts held by family members, friends, and associates, the stock prices of Hometown International and E-Waste were inflated by an astonishing 939% and 19,900%, respectively.
The fraudulent scheme began in 2014 when Patten suggested the creation of Hometown International as an umbrella corporation to a friend named Paul Morina, who was a high school principal and wrestling coach. Morina was unaware of Patten’s ulterior motive to manipulate the stock of Hometown International. Patten’s guilty plea to securities fraud serves as a significant development in the case, potentially putting pressure on the Cokers to consider plea deals.
James Patten, having confessed to securities fraud and conspiracy to commit securities fraud, faces a maximum sentence of 20 years in prison and fines totaling $5.25 million. However, given the federal sentencing guidelines, it is likely that his actual punishment will be significantly less severe. Patten’s sentencing will take place on April 23, after which the other securities fraud charges he faced alongside the Cokers will be dismissed. Patten’s lawyer, Ira Sorkin, has confirmed that his client admitted to engaging in wrongdoing but has not disclosed whether Patten will cooperate with prosecutors against the Cokers.
As a result of the exposure and subsequent investigation, Hometown International and E-Waste disavowed their market capitalization, acknowledging that there was no basis to support their inflated stock prices. Both companies proceeded to execute reverse mergers with other firms in an attempt to salvage their reputation. The closure of Your Hometown Deli, which served as Hometown International’s single asset, further emphasized the questionable nature of the company’s operations.
While lawyers for the Cokers argue that no one suffered financial losses due to the alleged scheme, prosecutors point to the substantial consulting fees paid out by Hometown and E-Waste, as well as funding from individuals not charged in the case. These factors suggest that the manipulative actions of Patten and the Cokers had financial consequences for unsuspecting investors and stakeholders.
This incident is not Patten’s first encounter with legal trouble. In 2010, he pleaded guilty to mail fraud charges and was sentenced to 27 months in prison for sending a client a false financial statement. Additionally, Patten was previously barred by FINRA, the broker-dealer regulator, for failing to comply with an arbitration award and committing unauthorized trading in a client’s account. Patten’s lawyer, Ira Sorkin, has extensive experience in high-profile cases, having previously represented the infamous Ponzi scheme mastermind Bernie Madoff.
As the legal proceedings continue, the focus shifts to the remaining defendants, Peter Coker Sr. and Peter Coker Jr. Their decision to plead not guilty raises questions about the strength of the evidence against them. However, with Patten’s guilty plea and the potential for cooperation, there is mounting pressure on the Cokers to reconsider their stance and potentially reach plea deals.
The manipulation of Hometown International stock serves as a stark reminder of the dangers posed by fraudulent schemes in the financial world. James Patten’s confession to securities fraud and his involvement in manipulating the stock prices of both Hometown International and E-Waste shed light on the lengths some individuals will go to deceive investors and create false impressions of demand. As the case unfolds, it remains to be seen how the legal system will hold all parties accountable for their actions and seek justice for those affected by this elaborate scheme.
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