A 53-year-old man has been arrested in Thailand on charges stemming from an alleged conspiracy to manipulate the share price of a sandwich shop in New Jersey that once commanded a stock market valuation of $100mn.
Peter Coker Jr was taken into custody at the request of American authorities on January 11, the US attorney’s office in New Jersey said. His arrest was reported earlier by the Bangkok Post.
An indictment unsealed last year in federal court described how Coker, his 80-year-old father, Peter Coker Sr, and 63-year-old James Patten allegedly orchestrated financial trades that were designed to create the false impression that there was real market interest in the shares of Your Hometown Deli. Patten and Coker Sr were arrested in North Carolina last September.
Hometown’s sole asset was a lunch spot in the refinery town of Paulsboro. It gained notoriety on Wall Street after it was cited by hedge fund manager David Einhorn as an example of the “quasi-anarchy” that he said had taken hold in financial markets during the 2021 boom.
“The pastrami must be amazing,” Einhorn observed at the time.
Hometown’s share price soared from $1 in October 2019 to nearly $14 by April 2021, even as revenue remained stagnant at about $40,000 and lawyers for the company told regulators that it was having “limited success operating its . . . delicatessen”.
Prosecutors allege that the share prices were the result of bogus trades orchestrated by the defendants, who sometimes submitted orders themselves using brokerage accounts belonging to their friends and associates.
On one occasion in January 2021, an account belonging to a Staten Island resident who was an associate of Patten was used to sell shares at a price of $13.99, prosecutors said. The buyer, who lived in New Jersey, turned out to be a close relative of Patten’s romantic partner, they added. Both orders were traced by law enforcement to an internet connection serving Patten’s home, according to the indictment.
Hometown began filing financial statements as a public company in 2015, and its shares traded “over the counter”, making them far less liquid than those listed on an exchange.
But in November 2020, as prosecutors say the criminal scheme was taking shape, Coker Jr appeared to set his sights on a listing on one of the main US stock markets.
“We have spent an enormous amount of time curating this asset,” he wrote in an email to his father that was cited in the indictment, “and are now ready to take Hometown to the next level (Nasdaq, etc)”.
Patten and Coker Sr have both pleaded not guilty.