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Peter Coker Sr. and his spouse Susan Coker at U.S. District Court in Newark, New Jersey, March 15, 2023.
Dan Mangan | CNBC
North Carolina businessman Peter Coker Sr., who pleaded to blame in a scheme to fraudulently pump up the inventory of the notorious $100 million New Jersey deli company and a linked shell corporation, was once sentenced Tuesday to 6 months in prison.
Coker Sr. additionally was once ordered to serve six months of house confinement after his free up, pay a $500,000 fantastic, and pay as much as $644,000 in restitution.
“I do stand before you extremely remorseful for my actions,” Coker Sr. stated as his spouse, daughter, grandchildren, and buddies seemed on in U.S. District Court in Camden, New Jersey.
“I’m terribly sorry for my part. This episode has been the worst time of my life,” the 82-year-old Chapel Hill resident stated. ‘I’m sorry for each and every investor who has been harmed by means of my movements.”
Federal sentencing guidelines had suggested a prison sentence of 51 to 63 months for Coker Sr.
But prosecutors said they wanted less time than that, namely the top end of a range of zero to 24 months that they stipulated when he pleaded guilty.
Coker Sr., his son Peter Coker Jr., and a third man, James Patten, conspired to artificially inflate the price of publicly traded shares of the companies — the deli-owning Hometown International and E-Waste — to make them more attractive as candidates for mergers with privately owned firms.
Both companies’ market capitalizations exceeded $100 million apiece, despite Hometown owning only a small, money-losing sandwich shop in South Jersey, and E-Waste having no actual business operations.
All three men pleaded guilty to securities fraud.
“This was once a fraudulent scheme from the inception,” Judge Christine O’Hearn said at the start of the hearing.
“The firms are, in reality, nugatory, and there’s no prospect for restoration,” O’Hearn said.
“This was once a multi-year, very subtle fraudulent scheme involving a kind of esoteric company construction, of which I’ve realized greater than I ever care to,” the judge said. “One that was once unlawful … and it brought about hurt.”
The judge opened the hearing by delivering a blow to defense lawyers, adopting prosecutors’ argument that there were nearly $5 million in losses from the scheme, which included investments by Duke and Vanderbilt universities.
“What is the inducement right here instead of greed? Because I do not see it,” O’Hearn asked at one point, after noting that all three defendants were each worth millions of dollars apiece.
Coker Sr. has a net worth of $6 million, the judge said.
Coker Jr. will be sentenced later Tuesday by O’Hearn.
Patten is due to be sentenced on June 10.
The younger Coker was not in court while his father was sentenced, because of a long delay in transporting him from a jail in Essex County. He has been detained there without bail since being extradited from Thailand in March 2023 following his arrest there as a fugitive.
Coker Jr. faces deportation after he serves his sentence. He renounced his U.S. citizenship in 2019, and holds citizenship in the Caribbean nation St. Kitts.
Coker Sr.’s lawyer, Zach Intrater, asked O’Hearn to sentence him to no prison time after describing him as a good family man who never disputed his criminal conduct after he was first charged.
“I don’t believe they make very many extra like Pete anymore,” the defense attorney said. “He’s courtly, his manners are impeccable.”
Intrater repeatedly referenced Susan Coker, who has been married to Peter for 61 years, asking the judge to allow the couple to remain together for what remains of their lives.
“He bears duty for enticing in an offense that did not simply harm different peopl,e that did not simply harm his circle of relatives, however that concerned his son, his handiest son, and figuring out that his son has been incarcerated partly from his personal movements and figuring out what has going down to his son right through that time period of incarceration.”
“Judge, I believe having to are living with that may be a punishment which may be worse than even what it is advisable to impose,” Intrater said.
The attorney also argued that Coker Sr. was not the “top mover” for the scheme.
Susan Coker told the judge, “He’s only a superb man.”
“I do know if he had a 2nd probability, he by no means would have accomplished any of this,” Susan said, her voice cracking.
Coker Sr. and Patten were arrested in September 2022, months after both Hometown merged with a bioplastics company, and more than a year after E-Waste did its own merger with an electric vehicle company.
Coker Jr., who previously resided in Hong Kong, was arrested months later.
The men were indicted more than a year after CNBC detailed a web of questionable connections between Hometown and E-Waste, as well as the prior criminal and civil court cases of Coker Sr. and of Patten, and consulting deals with both companies that benefited those two men.
The fraud got here to mild in April 2021 when hedge fund supervisor David Einhorn wryly noted that Hometown International’s market capitalization was $100 million despite owning just one asset whose annual revenue from selling sandwiches, soda, and chips was less than $36,000 for the past two years combined.
“The pastrami should be wonderful,” Einhorn wrote in a letter to clients.
Intrater on Tuesday said that he believed the case was prosecuted in large part because of the Einhorn letter, which generated significant coverage in the media.
The scam, which ran from 2014 through September 2022, coordinated trading of the stocks of the companies, creating the false impression of demand for shares that traded on OTC Marketplace.
The scheme began when Patten suggested the creation of Hometown as an umbrella corporation to his friend Paul Morina, a high school principal and renowned wrestling coach. The company would go on to own the Your Hometown Deli in Paulsboro, New Jersey.
Morina and the other deli owner were unaware of Patten’s scheme to manipulate Hometown’s stock.
Hometown’s stock price rose by more than 900% during the scheme. The price of E-Waste rose by nearly 20,000%.
In 2010, Patten pleaded guilty in New Jersey federal court to a mail fraud charge in connection with sending a client a false financial statement to cover up bad investments he made using her money. He was sentenced to 27 months in prison in that case.
Four years before, Patten was barred by the broker-dealer FINRA from acting as a stockbroker for failing to satisfy an arbitration award of more than $753,000, violating securities laws, and unauthorized trading for churning a client’s account.
Coker Sr. years ago was sued for allegedly hiding cash from collectors and alleged business-related fraud. He denied wrongdoing in the ones instances.
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