Date: March 16, 2023 Contact: newsroom@ci.irs.gov A former North Carolina resident appeared in court after he was arrested and returned to the United States from Phuket, Thailand, for his role in a large-scale market manipulation scheme related to two publicly traded companies, U.S. Attorney Philip R. Sellinger announced today. Peter Coker Jr., of Phuket, was charged in a 12-count indictment with conspiracy to commit securities fraud, securities fraud, and conspiracy to manipulate securities prices. Coker Jr., who was previously arrested in Phuket, Thailand, was returned to the United States today and made his initial appearance before U.S. Magistrate Judge Michael A. Hammer in Newark federal court on March 15, 2023. He was detained without bail. Peter Coker Sr. and James Patten were previously arrested on the indictment and those charges remain pending. According to documents filed in this case and statements made in court: From 2014 through September 2022, Patten, Coker Sr., and Coker Jr. 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. 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. Patten, Coker Sr., and Coker Jr. 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 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, almost immediately 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. In October 2019, Hometown International began selling shares on the OTC Marketplace. Shortly thereafter, Patten, Coker Sr., and Coker Jr. undertook a scheme to gain control of Hometown International's management and its shares from the deli owners. Patten, Coker Sr., and Coker Jr. 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. 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 $5 million fine. The counts of conspiracy to commit securities fraud and conspiracy to manipulate securities prices both carry a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense whichever is greatest. In a separate civil action, the Securities and Exchange Commission previously filed a complaint in the District of New Jersey charging Patten, Coker Sr., and Coker Jr. based on the allegations underlying the market manipulation scheme. U.S. Attorney Sellinger credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Tammy Tomlins in Newark, and special agents of the FBI's Philadelphia Division, under the direction of Special Agent in Charge Jacqueline Maguire, with the investigation. The government is represented by Assistant U.S. Attorneys Shawn Barnes, Chief of the OCDETF/Narcotics Unit, and Lauren Repole, Chief of the General Crimes Unit. The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
