Three men are facing federal charges after U.S. prosecutors accused them of orchestrating a brazen market manipulation scheme, the latest twist in the bizarre tale of a tiny New Jersey deli that somehow achieved a market capitalization of more than $100 million.
Your Hometown Deli became an emblem of a frothy stock market in April 2021, when the hedge fund manager David Einhorn criticized the incongruous rise of the deli’s parent company, Hometown International, in a letter to clients, quipping, “The pastrami must be amazing.”
The deli, which is in Paulsboro, New Jersey, near Philadelphia, was the sole asset of Hometown International, and, according to the Securities and Exchange Commission, brought in less than $40,000 in sales a year.
On Monday, the Justice Department charged James Patten, Peter Coker Sr. and Peter Coker Jr. on 12 counts, including conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices, for allegedly engaging in “a number of coordinated trading events, often referred to as match and wash trades,” in the stock of Hometown and another company, E-Waste Corp.
The SEC also accused the men of securities fraud. Coker Jr. sold multimillion-dollar stakes in the company to several Asian hedge funds, The New York Times Magazine reported last year, in the hopes that Hometown International could serve as a vehicle for a reverse merger.
This year, the company merged with Makamer, a bioplastics startup. The deli, which apparently served “a mean cheesesteak,” closed after the merger, according to a regulatory filing.
After the charges were announced in a lawsuit filed on Monday, Einhorn tweeted: “I guess the Pastrami wasn’t so great. I never really got a chance to try it,” followed by a laughing emoji.