The father and son who helped orchestrate a market manipulation scheme that resulted in a New Jersey deli enjoying a market cap of more than US$100 million at the height of the meme stock frenzy have pled guilty to securities fraud charges.
The pair — Peter Coker, Sr. and Peter Coker, Jr. — were charged in 2022, along with a third man, a former registered rep, James Patten, in connection with a scheme to inflate the value of a couple of companies that traded on the over-the-counter (OTC) markets, Hometown International Inc. and E-Waste Corp.
According to court filings, Hometown International’s sole asset was a deli that a couple of Patten’s friends opened in 2014.
“[A]fter 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,” U.S. authorities alleged in an indictment.
In 2019, the accused sought to gain secret control of the companies’ stock and management and began issuing millions of shares to various nominees that they secretly controlled, including entities controlled by Coker Jr., along with the trading accounts of friends and family members.
They then engaged in wash trading that ultimately artificially inflated Hometown International’s stock by approximately 939% and boosted E-Waste’s stock by approximately 19,900%.
At the height of the meme stock frenzy in 2021 — which saw retail investors driving the stock prices of certain companies to dizzying heights, without any regard for their business fundamentals — Hometown International had a market cap of more than US$100 million, despite its sole asset generating less than US$40,000 in annual revenues.
In 2022, the U.S. Securities and Exchange Commission (SEC) charged the Cokers and Patten in connection with the scheme. They were also charged criminally in a 12-count indictment alleging securities fraud, wire fraud, market manipulation, conspiracy and money laundering.
On Thursday, the Cokers pled guilty to securities fraud and conspiracy to commit securities fraud before U.S. district judge Christine O’Hearn. Patten previously pled guilty to the same charges.
Coker Jr. is scheduled to be sentenced on April 2, 2025, and Coker Sr.’s sentencing is set for May 13, 2025.