FAST FIVE: SEC Alleges Market Manipulation, Charges 3 Men With Fraud, In $100 Million New Jersey Deli Scheme
Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey.
Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious.” And now, so goes the bubble, so goes the deli.
The Securities and Exchange Commission has officially put the kibosh on the fairly obvious scam, suing the deli and its related personnel for fraud in what is being called the “$100 million New Jersey deli scheme” by CNBC. Several men were charged with 12 counts of fraud, including conspiracy to commit securities fraud, securities fraud and conspiracy to manipulate securities prices, the report said.
The men appeared in a North Carolina court this week and are expected in New Jersey federal court at a later date. One defendant involved, 63 year old James Patten, had been barred by FINRA last year and was “the subject of repeated disciplinary actions by FINRA”, CNBC wrote.
“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,” the government alleged in their complaint. “Shortly thereafter, [the defendants] undertook a calculated scheme to gain control of Hometown International's management and its shares from the deli owners,” the complaint reads.