Inside the '$100 Million Deli Scam'
A new report details the mechanics of a $100 million stock fraud centered on a small New Jersey deli. The scheme, which involved shell companies and ensnared university endowments, illustrates the audacity of modern corporate crime and the challenges regulators face in policing microcap markets.
- The scheme was orchestrated by Peter Coker Sr., his son Peter Coker Jr., and their associate James Patten, who were charged by the SEC and federal prosecutors. The trio artificially inflated the stock of Hometown International, the deli's parent company, by approximately 939% and a shell company called E-Waste Corp. by 19,900%. - From October 2019 to April 2021, the share price of Hometown International was driven from about $1 to nearly $14. This resulted in a market capitalization exceeding $100 million, despite the deli generating less than $40,000 in annual revenue. - The fraud was executed through "wash trades" and other manipulative tactics to create a false appearance of active trading and genuine market interest. The ultimate goal was to use the inflated stock of the shell companies to conduct reverse mergers with private companies and then sell the shares at a massive profit. - The scheme was first brought to wider public attention in April 2021 by hedge fund manager David Einhorn, who questioned the deli's massive valuation in a letter to investors, sarcastically noting, "The pastrami must be amazing." This media attention helped thwart the scheme before the perpetrators could fully cash out. - In December 2024, Peter Coker Sr. and Peter Coker Jr. pleaded guilty to securities fraud and conspiracy. Peter Coker Sr. was subsequently sentenced to six months in prison and six months of home detention, while Peter Coker Jr. received a 40-month prison sentence. Their associate, James Patten, had also previously pleaded guilty. - One of the conspirators, Peter Coker Jr., was arrested in Thailand after being considered at large. The deli itself, Your Hometown Deli in Paulsboro, New Jersey, closed down in June 2022.
