(Bloomberg) -- The last two defendants charged with scheming to inflate the value of a small New Jersey deli to more than $100 million pleaded guilty to fraud charges, a year after the ringleader of the plot confessed.
Peter Coker Sr. and his son Peter Coker Jr. entered their pleas to securities fraud and conspiracy to commit securities fraud on Thursday before a federal judge in Camden, New Jersey, prosecutors said in a statement. They face as long as 20 years in prison and a $5 million fine at sentencing next year.
“Your Hometown Deli” in Paulsboro, New Jersey, became infamous on Wall Street when David Einhorn of Greenlight Capital highlighted the business in an April 2021 letter to investors as an example of irrational exuberance in the market. Einhorn noted that the deli barely had sales of $20,000 in 2019 and even less in 2020 despite reaching a nine-figure valuation in its SPAC merger with a bioplastics startup.
“The pastrami must be amazing,” Einhorn observed.
The younger Coker is “happy that he is now going to be able to move forward to sentencing,” said his attorney, John Azzarello.
Coker Jr., who was arrested as a fugitive in Thailand at the request of US authorities in January 2023, has already served two years in the Essex County Jail “under some really rough conditions and at least 65 days in a Thailand prison,” Azzarello said. “He’s very much looking forward to being sentenced and moving forward and moving on with his life.”
Peter Intrater, a lawyer for Peter Coker Sr., declined to comment.
The leader of the scheme, James T. Patten of Winston-Salem, North Carolina, pleaded guilty in December 2023, saying he worked with the Cokers to manipulate the stock prices of Hometown International Inc. and another company through coordinated trading that created the false impression that there was real supply and demand for the shares.
According to prosecutors and a parallel suit filed by the Securities and Exchange Commission, Patten helped start the deli in October 2015 but soon began conspiring with the Cokers to create a public company that would serve as a reverse-merger vehicle. Hometown merged in March 2022 with Makamer Holdings, selling the deli’s inventory for $700 and the store itself for $15,000.
The government also alleged they used the same method drive up the shares of another company, E-Waste Corp.
Patten faces as much as 20 years in prison at his sentencing next month. Coker Jr., 56, is scheduled to learn his punishment on April 2, while Coker Sr., 82, of Chapel Hill, North Carolina, will be sentenced on May 13.
The case is US v. Patten, 22-cr-643, US District Court, District of New Jersey.
(Updates with comments from defense attorney starting in fifth paragraph.)
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