Man Behind $100M Deli Stock Scam Is Sentenced

A onetime stockbroker who manipulated markets to make a company that owned a single struggling New Jersey sandwich shop worth $100 million on paper is headed to prison. James Patten, 67, was sentenced Tuesday to 21 months behind bars for securities fraud and conspiracy tied to a scheme that wildly inflated the value of Hometown International—the company that owned the now-closed Your Hometown Deli in Paulsboro—and a shell firm called E-Waste. At sentencing Tuesday, Judge Christine O'Hearn in Camden, NJ, pointed to Patten's earlier federal fraud conviction in an unrelated case and noted he launched the deli scam while still on supervised release and owing restitution.

Prosecutors said coordinated trading pushed Hometown's stock up 939% and E-Waste's nearly 20,000%, making them attractive vehicles for reverse mergers, reports CNBC. As NJ.com reports, the small deli just southwest of Philadelphia "drew scrutiny after filing financial reports showing less than $40,000 in annual revenue from selling cheesesteaks and Wiz fries while its parent company, Hometown International, was valued at more than $100 million."

Patten, who had pleaded guilty in the case and asked for no prison time, apologized in court. In addition to three years of supervised release, Patten is jointly on the hook with co-defendants Peter Coker Sr. and Jr. for more than $5.5 million in restitution, most of it owed to Duke and Vanderbilt universities. Those men have already served six and 40 months, respectively.