$100 million New Jersey deli case: Defendants plead not guilty

CAMDEN, New Jersey. Two men charged in an alleged stock manipulation scheme involving a deli in small town New Jersey pleaded not guilty Tuesday morning.

Peter Cocker Sr., 80, and James Patten, 63, who were arrested by federal authorities last month in North Carolina, filed their petitions at the federal courthouse, which is about 20 minutes from the now-closed downtown store. . case.

Patten told CNBC ahead of Tuesday’s hearing that he has hired attorney Ira Sorkin, who is known for representing the late Ponzi schemer Bernie Madoff. Sorkin previously represented Patten in a dispute with the Securities and Exchange Commission. who was fired in 2006.

Cocker Sr. is being represented by Mark Agnifilo, who has previously defended fraudster and “pharmacist” Martin Shkreli, disgraced film producer Harvey Weinstein, NXIVM cult leader Keith Raniere, and a Russian bank under sanctions over its invasion of Ukraine. Agnifilo did not immediately respond to a CNBC request for comment prior to the hearing.

Patten was in good spirits in court on Tuesday, joking about CNBC’s coverage of the case and saying he felt pretty good. Cocker senior was joined by his wife, Susan, and he remained silent, arms folded across his chest or chin propped up.

Patten and Cocker are charged with multiple federal crimes, including fraud, for allegedly inflating the value of a publicly traded company that reached a market capitalization of more than $100 million last year despite only owning Your Hometown Deli in Paulsboro. , New Jersey. name. The deli’s sales were less than $40,000 a year.

Federal prosecutors described the case as a story of international fraud and betrayal. 53-year-old Peter Cocker Jr., son of Cocker Sr., lives in Hong Kong and is believed to be free. Federal authorities tried to detain Cocker Sr. before agreeing to parole. On Friday, he turned in his passport to North Carolina authorities. Both he and Patten are not allowed to leave the continental United States.

The SEC also sued the men in a civil case over the alleged conspiracy.

The men were accused of being involved with Hometown International and a similar shell company called E-Waste. Prosecutors allege that the men sought to enrich themselves by overcharging Hometown International and E-Waste. At some point, their value in the so-called over-the-counter markets increased by 939% and 19,900%, respectively.

The men are charged with conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices. Fraud and fraud charges carry a maximum penalty of 20 years in prison and a maximum fine of $5 million.

Patten is also charged with securities fraud, wire fraud and money laundering.

According to the indictment, the men deceived the founders of Your Hometown Deli – Paul Morina, Patten’s former wrestling high school mate, and Morina’s colleague Kristin Lindenmuth – by telling them that the umbrella corporation could help expand the restaurant. Neither Morina, the principal and wrestling coach at Paulsboro High School, nor Lindenmuth, a math teacher at the same school, were mentioned by name in court documents.

The men then coordinated control and transfer of shares in Hometown International between themselves and their friends to inflate the share price, prosecutors said.

Patten did not comment when asked Tuesday morning if he had spoken to Morina since then.

Prosecutors said Patten and the Cockers personally enriched themselves through consulting contracts that paid $15,000 per month to Cocker’s company, Tryon Capital, based in North Carolina, and Cocker’s, Macau-based company, VCH Limited, paid $25. 000 dollars per month. James Patten was a partner at Tryon Capital.

The men had similar, albeit smaller, consulting contracts with E-Waste.

Ultimately, the men planned to use both Hometown International and E-Waste as reverse merger vessels, allowing other companies to go public through the two vehicles, authorities said.

When Maccamer Holdings, a bioplastics company, initiated a reverse merger with Hometown International, the deli was sold for $15,000. The grocery store is now permanently closed.

Cocker Sr. and Patten have dealt with regulators and the law before.

In 1992, Cocker Sr. was sued for allegedly hiding money from creditors as well as alleged business-related fraud. He denied wrongdoing in those cases, one of which was settled out of court in recent years in North Carolina. In the same year, Cocker Sr. was also accused of indecent behavior by a minor.

In 2006, Patten was expelled from FINRA, the broker-dealer regulator, for failing to enforce an arbitral award of more than $753,000 for violations of securities laws, unauthorized trading, and client account churning.

The features surrounding Your Hometown Deli first caught the attention of hedge fund manager David Einhorn in 2021.

“Pastrami must be delicious,” Einhorn joked at the time. After the accusations last monthhe tweeted, “I guess the pastrami wasn’t that good.”