A father and son have admitted to orchestrating a large-scale market manipulation scheme related to two publicly traded companies

Peter Coker, Sr., 82, of Chapel Hill, North Carolina and Peter Coker, Jr., 56, formerly of Hong Kong, China, both pleaded guilty before U.S. District Judge Christine P. O’Hearn to securities fraud and conspiracy to commit securities fraud.

James Patten, 65, of Winston-Salem, North Carolina had previously pleaded guilty to the same charges.

According to documents filed in this case and statements made in court:

From 2014 through September 2022, Peter Coker Sr., Peter Coker Jr., and Patten conspired to enrich themselves through a scheme to manipulate securities prices via a pattern of coordinated trading, which injected inaccurate information into the marketplace, creating false impressions of supply and demand for these securities.

As part of the securities fraud scheme, the defendants targeted two publicly traded companies—Hometown International Inc. and E-Waste Corp.—which were both traded on the OTC Link Alternative Trading System, also known as the OTC Marketplace. The OTC Marketplace is an alternative trading system that contains three tiers of markets, which are largely based on the quality and quantity of the listed companies’ information and disclosures.

Coker Sr., Coker Jr., and Patten took steps to gain control of both entities’ management and stock with the ultimate intention of entering reverse mergers, a transaction through which an existing public company merges with a private operating company. A successful reverse merger would allow the defendants to sell shares of each entity at a significant profit.

In or around 2014, two New Jersey residents began the process of opening a local deli in Paulsboro, New Jersey. One of the individuals discussed his interest in opening the deli with Patten, a long-time friend, who suggested the creation of Hometown International, an umbrella corporation, under which the deli would operate as a wholly owned subsidiary. Unbeknownst to the deli owners, 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.

Around October 2019, Hometown International began selling shares on the OTC Marketplace. 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. Coker Sr., Coker Jr., and Patten took similar actions to gain control of E-Waste Corporation’s stock and management.

Once the defendants gained control of Hometown International and E-Waste’s shares, they arranged for the transfer of millions of shares of stock to a number of nominee entities, including entities controlled by Coker Jr., in an effort to mask their control of the shares.

In addition, the defendants transferred shares to family members, friends, and associates and gained control over their trading accounts by obtaining their log-in information in order to conceal the defendants’ involvement. 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.

These tactics artificially inflated the price of Hometown International and E-Waste’s stock by giving the false impression that there was a genuine market interest in the stock. Their scheme had the ultimate impact of artificially inflating Hometown International’s stock by approximately 939 percent and E-Waste’s stock by approximately 19,900 percent.

The securities fraud count carries a maximum penalty of 20 years in prison and a USD5 million fine. The conspiracy to commit securities fraud carries a maximum penalty of five years in prison and a USD250,000 fine, or twice the gross gain or loss from the offence whichever is greatest.

The Chase

According to Inside Asia Gaming magazine, Peter Coker Jr became aware of the USA's interest in him around the time of the failure of his hotel project The 13, in Macau. Having already renounced his US Citizenship, Coker went on the run and interpol red and black notices were issued. He was eventually arrested in a hotel in Phuket. He was detained in jail in Thailand pending extradition during which time it is said he lost some 20kg in weight. Investigations showed that he had access to assets worth about USD3 million and so bail, both in Thailand and the USA was not an option. His adventure only lasted a few months before the USA shipped him back for trial.