Scam on Rye: the Inside Story of a $100 Million Deli Fraud

Core Insights - The article details the rise and fall of Hometown International, a company that owned Your Hometown Deli, which became infamous for its inflated stock value despite minimal revenue, highlighting issues of stock manipulation and fraud in the financial markets [4][42][55] Company Overview - Hometown International was incorporated in May 2014 with the deli as its sole asset, and it had a market cap of $113 million despite earning only $36,000 in revenue over the previous two years [27][42] - The deli was intended to serve as a community hub and a retirement plan for Paul Morina, a celebrated wrestling coach in Paulsboro, New Jersey [3][4] Financial Manipulation - The stock of Hometown International rose dramatically, reaching $14 per share, which represented a market cap of over $113 million, despite the company having less than $36,000 in sales [42][55] - The manipulation involved transferring shares to nominee entities and conducting trades to create a false impression of market interest, which inflated the stock price [39][40] Investment and Partnerships - Duke and Vanderbilt Universities invested $1.25 million each in Hometown International, which was managed by Maso Capital, raising concerns about due diligence and oversight in their investment processes [34][35] - The involvement of Peter Coker Jr. and his connections in Hong Kong was pivotal in the scheme, as he sought to leverage the deli's public status for further financial gain [31][32] Legal Consequences - The scheme led to federal investigations, resulting in charges against key figures, including James Patten and the Cokers, for securities fraud and stock manipulation [51][53] - Patten faces a maximum sentence of 20 years in prison and restitution fees of $5.5 million, while the Cokers have also pleaded guilty to related charges [54][55]