Infamous $100 Million New Jersey Deli Draws SEC Fraud Suit

Three people were charged with securities fraud and market manipulation for their involvement in a $100 million public company.

James T. Patten, Peter L. Coker, and Peter L. Coker Jr. were accused of manipulating the price of companies. The sole asset of the company was a deli located across the river from Philadelphia.

Greenlight Capital's David Einhorn highlighted the company in a letter to investors in April 2021. Despite reaching a nine-figure valuation, the deli barely had sales of $20,000 in 2019?

Einhorn said the pastrami must be great. The regulators who are supposed to be protecting investors don't seem to be interested.

Einhorn sees broken markets in New Jersey.

A federal judge in North Carolina will hear the case of the two North Carolina residents who were arrested on Monday. Coker Jr., a Hong Kong resident, is still on the run.

The civil suit was filed by the SEC against the three. The lawyers for the three men are not currently known.

The SEC filed a lawsuit in federal court in Camden, New Jersey, accusing the two Cokers and Patten of manipulating the value of the over-the-counter shares. They drove the company's value up to more than $100 million.

Three men are accused of using the same method to push up the price of E-Waste Corp., a Kent, Washington-based company that merged with another company.

$700 Inventory

At one point, the price of E-Waste went from 10 cents a share to $10 a share, resulting in a market cap of about $120 million for a shell company.

Three men are accused of conspiracy to commit securities fraud. Four counts of manipulation of securities, four counts of wire fraud, and one count of money-laundering are included in the charges. If they're found guilty of the most serious charges, they could face 20 years in prison.

According to the SEC, Patten started the deli with a childhood friend and his girlfriend and soon began conspiring with the Cokers to create a public company that would serve as a reverse-merger vehicle. In the year after the company began trading, Patten paid his co-founders $3,000 for a 38% stake in the deli and then exercised an option for their remaining stake.

The deli's inventory was sold for $700 and the store itself for $15,000 in March.

The criminal case is in the district of New Jersey. The case is in the District of New Jersey.