A fugitive from Thailand was returned to the United States to face charges in a massive market manipulation scheme involving a New Jersey deli company whose stock was once valued at an illogical $100 million, federal authorities announced.
A U.S. District Court magistrate judge in Newark ordered one-time Hong Kong businessman Peter Coker Jr. held after he was flown in custody from a Bangkok jail.
Coker, 54, formerly of North Carolina, was seized at a hotel in the resort area of Phuket in mid-January following the arrests of his father, Peter Coker Sr., and James Patten in North Carolina.
Coker Jr. apparently entered Thailand with a passport issued by the Caribbean island of St. Kitts and Nevis, which authorities note sells citizenship in exchange for investments.
He, his father and Patten are all charged with various financial crimes involving two publicly-traded companies in an indictment returned by a federal grand jury in Camden.
One of them, Hometown International, drew a nine-figure valuation despite owning only a now-defunct deli in Paulsboro, a mile from the Delaware River, authorities said. The other was a shell company with no assets called E-Waste, they said.
The defendants artificially pumped up over-the-counter stock prices for both companies to astronomical levels – Hometown by nearly 1,000% and E-Waste by 19,900% -- to make them appear ripe for a private takeover, the indictment alleges.
They then orchestrated a reverse merger before selling the shares of each entity at a significant profit, it says.
One of the alleged tactics involved transferring shares to family members, friends, and associates and then using their login info to control their trading accounts.
“The defendants then used those accounts to commit a number of coordinated trading events, often referred to as match and wash trades, to trade in Hometown International and E-Waste Corp.’s stock on both sides of the transaction,” U.S. Attorney for New Jersey Philip R. Sellinger said.
Sellinger outlines the alleged scheme here: Securities Fraud Fugitive Arrested and Returned to the United States (USAO-NJ)
Things came apart after popular short seller David Einhorn blew the whistle on Hometown’s absurd valuation, noting that the deli sold less than $14,000 worth of sandwiches and such the year before.
“The pastrami must be amazing,” Einhorn wrote in a letter to clients.
Coker Jr., who’d lived for decades in Hong Kong, was Hometown International’s chairman. He’d also been executive chairman of South Shore Holdings Ltd., a Hong Kong company that owned “The 13,” a financially troubled hotel in Macau, China – which got him the nickname “Macao Boy.”
A joint investigation by the FBI and Thailand’s Central Investigation Bureau led to his arrest earlier this year.
Defense attorney John Azzarello of Morristown, who entered a not-guilty plea for Coker on Wednesday, told U.S. District Court Magistrate Judge Michael Hammer that his client endured “pretty deplorable” conditions during the two months he was detained in a Bangkok jail.
He’s lost a lot of weight, witnesses in the Newark courtroom said, and reportedly told authorities in Thailand that he has liver disease.
Coker’s co-defendant father, 80, and his mother reportedly attended the brief court appearance and apparently were prepared to offer their home as collateral on a release bond for their son. That arrangement had yet to be worked out.
Sellinger credited special agents of the FBI’s Philadelphia Division and special agents of IRS-Criminal Investigation with the investigation, which produced charges against the junior and senior Cokers and Patten include conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices.
Patten is also charged with four counts of manipulation of securities, four counts of wire fraud, and one count of money laundering.
Assistant U.S. Attorneys Shawn Barnes, who’s chief of Sellinger’s Organized Crime Drug Enforcement Task Force/Narcotics Unit, and Lauren Repole, who’s chief of his General Crimes Unit, are handling the case for the government.
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