Federal prosecutors ask judge to postpone SEC case in alleged New Jersey deli stock fraud

Federal prosecutors in New Jersey need the Securities and Exchange Commission to postpone its civil case towards the alleged masterminds behind a $100 million fraud scheme involving a small-town deli so it will not get in the way in which of their ongoing felony case. 

Prosecutors for the District of New Jersey filed a movement on Wednesday saying the SEC’s case “substantially” overlaps with their ongoing felony case and the civil matter ought to be postponed till the litigation, together with a possible trial, is accomplished, courtroom information present. 

Postponing the civil case would “preserve the integrity” of the continued prosecution by stopping the defendants from seeing the extent of the federal government’s proof towards them, federal prosecutors argued in the submitting. 

During the invention part of civil and felony issues, defendants have the flexibility to see the proof that is going to be used towards them in trial however they’ve entry to way more supplies in civil issues as a result of the confines are broader. 

The SEC and the attorneys for the suspects consented to the request, which is widespread in such circumstances. Judge Christine O’Hearn has but to rule on the matter. 

A phone convention is scheduled in the felony case for Dec. 14, but it surely’s anticipated to be largely procedural and a chance for the prosecutors and protection attorneys to replace the judge on the standing of the litigation. 

In September, James Patten and father-and-son duo Peter Coker Sr. and Peter Coker Jr. have been arrested and charged with securities fraud for allegedly orchestrating a scheme that inflated the costs of two publicly traded firms, Hometown International and E-Waste Corp, a shell firm.

Makamer, a bioplastics startup, merged with Hometown International, earlier this year.

Even although Hometown International’s solely asset was Your Hometown Deli, a now-closed tiny sandwich store in Paulsboro, New Jersey, that had beneath $40,000 in annual income, the trio used manipulative buying and selling to inflate its market capitalization to greater than $100 million, prosecutors alleged. 

The scheme started when Patten satisfied the proprietor of Your Hometown Deli, esteemed native highschool wrestling coach and principal Paul Morina, to put the restaurant beneath the management of Hometown International, an umbrella firm they created, prosecutors alleged

“Unbeknownst to the deli owners, almost immediately after Hometown International was formed, Patten and his associates began positioning Hometown International as a vehicle for a reverse merger that would yield substantial profit to them,” prosecutors mentioned beforehand in a information launch. 

“Shortly thereafter, Patten, Coker Sr., and Coker Jr. undertook a calculated scheme to gain control of Hometown International’s management and its shares from the deli owners.”

The males concocted an identical scheme to take management of E-Waste. The techniques “artificially inflated” the values of Hometown International and E-Waste stock by 939% and 19,900%, respectively, prosecutors mentioned. 

Coker Sr. and Patten have pleaded not guilty.

Patten’s lawyer Ira Sorkin, the high-profile litigator who as soon as repped the infamous Ponzi scheme fraudster Bernie Madoff, did not remark when requested whether or not the case is anticipated to go to trial. 

Coker Sr.’s lawyer Marc Agnifilo, who beforehand defended “pharma bro” Martin Shkreli and disgraced film producer Harvey Weinstein, could not be reached. It’s not clear whether or not the Hong Kong-based Coker Jr. has an lawyer, and he remains a fugitive. Morina did not reply to a request for remark. 

Patten, Coker Sr. and Coker Jr. have been charged a bit over a yr after Hometown International’s doubtful stock was revealed by hedge fund manager David Einhorn in a letter to purchasers warning of the hazards retail traders face. 

“Someone pointed us to Hometown International (HWIN), which owns a single deli 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 a Director, who also happens to be the wrestling coach of the high school next door to the deli,” Einhorn mentioned in the April 2021 letter. “The pastrami must be amazing.”

After information of the indictment broke, he quipped on Twitter: “I guess the Pastrami wasn’t so great.”