(Bloomberg) -- A man who orchestrated a scheme that inflated the value of a small New Jersey deli to more than $100 million pleaded guilty to fraud.
James T. Patten on Wednesday admitted he committed securities fraud and conspiracy in a hearing before US District Judge Christine P. O'Hearn in Camden, New Jersey, according to prosecutors.
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Patten, 64, was one of three men charged in September 2022 with scheming to artificially inflate the price of two companies through manipulative trading, including Hometown International Inc. That company's only asset was “Your Hometown Deli” in Paulsboro, New Jersey, just across the Delaware River from the Philadelphia airport.
Ira Sorkin, a lawyer for Patten, didn't immediately respond to a request for comment.
Hometown became infamous on Wall Street when David Einhorn of Greenlight Capital highlighted the company 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.
“The pastrami must be amazing,” Einhorn observed.
Patten, of Winston-Salem, North Carolina, said he worked with two other men, Peter L. Coker Sr. and Peter L. Coker Jr., to manipulate the companies' stock prices 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, a bioplastics startup, selling the deli's inventory for $700 and the store itself for $15,000.
Patten faces as much as 20 years in prison at his sentencing, which is scheduled for April 23. Peter Coker Sr., who was arrested in North Carolina in September 2022, remains free on bail pending trial. Peter Coker Jr. was arrested in Thailand in January and remains in custody.
The case is US v Patten, 22-cr-643, US District Court, District of New Jersey.
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