James Patten, aged 67, was sentenced to 21 months in prison for his role in a securities fraud scheme that artificially inflated the stock prices of Hometown International and E-Waste. Patten, who had previously pleaded guilty, was part of a conspiracy with Peter Coker Sr. and Peter Coker Jr., who have already served their sentences of six and 40 months, respectively.
The scheme resulted in Hometown's stock price rising by 939% and E-Waste's by an astonishing 19,900%. The manipulation aimed to make these companies more appealing for reverse mergers with private firms seeking public trading status.
Patten's involvement began in 2014 when he proposed the creation of Hometown International while discussing a deli venture with a high school wrestling teammate, Paul Morina, who was unaware of the fraudulent activities. The deli, which was the sole asset of Hometown, closed in 2022.
The case gained attention following a letter from hedge fund manager David Einhorn, which questioned the deli's inflated stock price relative to its actual business operations. This sentencing underscores the risks associated with investing in small-cap stocks, particularly those with questionable business fundamentals