By Will Feuer
The U.S. Securities and Exchange Commission sued three men with ties to the company once known as Hometown International Inc. for allegedly perpetrating fraudulent and manipulative stock-trading schemes.
James T. Patten, Peter Coker, Sr., and Peter Coker, Jr., all were previously connected to Hometown International, which has since merged with bioplastics company Makamer Holdings Inc.
Hometown International garnered intense scrutiny last year after hedge-fund manager David Einhorn flagged the company's curiously high market valuation in a letter to his investors. Hometown International was the parent company of a single deli in Paulsboro, N.J., that had around $35,000 in combined sales over the prior two years.
The SEC alleges that since 2014, the three men have sought to inflate the stock price of the company through a series of so-called matched and wash trades, and to sell their shares at artificially high prices.
According to the SEC's complaint, the three men would buy shares of the company, artificially inflate the price through manipulative trading and use the company to buy privately-held business in reverse mergers only to then sell their shares at inflated prices. Beyond Hometown International, the three men perpetrated a similar scheme with a separate shell company called E-Waste Corp., the SEC alleges.
"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," said Scott Thompson, the SEC's associate director of enforcement in the Philadelphia Regional Office.
The SEC's complaint, filed in the U.S. District Court for the District of New Jersey, charges all three defendants with violations of the antifraud provisions of the securities laws. The complaint also charges Mr. Patten with violating market manipulation provisions of the securities laws and charges Mr. Coker Sr. and Mr. Coker Jr. with aiding and abetting those violations.
In a parallel action, the U.S. Attorney's Office for the District of New Jersey announced criminal charges against the three defendants, as well.
Write to Will Feuer at Will.Feuer@wsj.com
(END) Dow Jones Newswires
September 26, 2022 14:38 ET (18:38 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.