SEC Charges Owners of Jersey Deli Somehow Worth $100 Million With ‘Brazen’ Fraud

On Tuesday, the Securities and Exchange Commission charged the owners of a publicly-traded New Jersey deli business with running a massive market manipulation scheme. The deli made headlines last year for somehow being valued at more than $100 million on the stock market.

The SEC wrote in an announcement of the charges that the deli owners, Peter L. Coker Sr., Peter L. Coker Jr., and James T. Patten, were “orchestrating fraudulent manipulative securities trading schemes.” The trio set up a company called Hometown International, which financial experts called a "mini-SPAC" in 2021, when it announced it would be publicly traded and valued itself at $100 million—an outrageous claim for a tiny Paulsboro, N.J. cold cut and cheesesteak counter.

The deli itself was earning less than $40,000 in annual revenue, according to the SEC, but artificially inflated the share price of Hometown International from approximately $1 per share in October 2019 to nearly $14 per share by April 2021. This led to “a grossly inflated market capitalization of $100 million,” the SEC wrote.

The owners of Hometown International set up another shell company, E-Waste Corp., and then used the two entities to buy other private companies in reverse mergers. The plan, the SEC says, was to dump those shares at inflated prices, but before they could do so, news articles came out about the mysterious $100 million deli, killing their grand plan to reap the profits. 

“We allege that the defendants’ brazen schemes resulted in the artificial inflation of the stock price of two publicly traded companies with little to no annual revenues,” Scott A. Thompson, Associate Director of Enforcement in the Philadelphia Regional Office, said in the SEC’s announcement. “Such manipulative schemes diminish the trust investors must have in the integrity of the markets, and we will pursue those who engage in such wrongdoing.”

The $100 million deli rose to fame during a time when hamsters were trading crypto on Twitch livestreams and just about everyone got into trading meme stocks for nostalgic mall stores, so a tiny suburban sandwich shop being valued at $100 million might have gotten lost in the madness. But now that the SEC has charged the owners with fraud, they’re facing serious penalties and criminal charges.