Prosecutors want $100 million NJ deli SEC case postponed

Federal prosecutors in New Jersey want the Securities and Exchange Commission to postpone its civil case against the alleged masterminds behind a $100 million fraud scheme involving a small-town deli so it won’t get in the way of their ongoing criminal case. 

Prosecutors for the District of New Jersey filed a motion on Wednesday saying the SEC’s case “substantially” overlaps with their ongoing criminal case and the civil matter should be postponed until the litigation, including a potential trial, is completed, court records show. 

Postponing the civil case would “preserve the integrity” of the ongoing prosecution by preventing the defendants from seeing the extent of the government’s evidence against them, federal prosecutors argued in the filing. 

During the discovery phase of civil and criminal matters, defendants have the ability to see the evidence that’s going to be used against them in trial but they have access to far more materials in civil matters because the confines are broader. 

The SEC and the attorneys for the suspects consented to the request, which is common in such cases. Judge Christine O’Hearn has yet to rule on the matter. 

A telephone conference is scheduled in the criminal case for Dec. 14, but it’s expected to be mostly procedural and an opportunity for the prosecutors and defense attorneys to update the judge on the status of the litigation. 

In September, James Patten and father-and-son duo Peter Coker Sr. and Peter Coker Jr. were arrested and charged with securities fraud for allegedly orchestrating a scheme that inflated the prices of two publicly traded companies, Hometown International and E-Waste Corp, a shell company.

Makamer, a bioplastics startup, merged with Hometown International, earlier this year.

Even though Hometown International’s only asset was Your Hometown Deli, a now-closed tiny sandwich shop in Paulsboro, New Jersey, that had under $40,000 in annual revenue, the trio used manipulative trading to inflate its market capitalization to more than $100 million, prosecutors alleged. 

The scheme began when Patten convinced the owner of Your Hometown Deli, esteemed local high school wrestling coach and principal Paul Morina, to put the restaurant under the control of Hometown International, an umbrella company they created, prosecutors alleged

“Unbeknownst to the deli owners, almost immediately after Hometown International was formed, Patten and his associates began positioning Hometown International as a vehicle for a reverse merger that would yield substantial profit to them,” prosecutors said previously in a news release. 

“Shortly thereafter, Patten, Coker Sr., and Coker Jr. undertook a calculated scheme to gain control of Hometown International’s management and its shares from the deli owners.”