Courtroom sketch of James Patten, left, and attorney Ira Sorkin at N.J. District Court in Camden, N.J., Oct. 11, 2022
Source: Elizabeth Williams
One of the men charged in an alleged stock manipulation scheme involving shell companies and a small-town New Jersey deli is making thousands of dollars from another shell company, according to a securities filing.
James Patten, was charged with federal crimes last month for allegedly inflating the value of Hometown International, which owned the deli, and E-Waste, which had no actual business.
Patten is also involved in a company called Med Spa Vacations, which reported expenses of $93,999 and no revenue during the quarter that ended Sept. 30. Med Spa, which wasn’t named in the indictment, also pays $2,500 a month in consulting fees to Patten’s firm Benchmark Capital.
Benchmark Capital also used to receive $5,000 a month in consulting fees from E-Waste, according to the Justice Department. A complaint from the Securities and Exchange Commission said the Benchmark Capital agreement with E-Waste “failed to disclose the relationship between Patten and E-Waste.”
Patten’s name hasn’t appeared in Med Spa filings.
Patten attorney Ira Sorkin declined to comment. A spokesperson for the Justice Department could “only confirm the currently pending charges.”
Prosecutors accused Patten, along with father-and-son duo Peter Coker Sr. and Peter Coker Jr., of enriching themselves through consulting agreements that the SEC says lacked proper disclosure. Authorities also said they artificially inflated the market value of Hometown International and E-Waste by 939% and 19,900% respectively.
Around half of Med Spa’s shares are owned by Global Equity Limited, where Patten is a senior vice president. About 10% of the company is held by Coker Sr.’s wife, Dina Coker, and 16.63% is owned by Hometown Global Services, which is controlled by Coker Sr.
Coker Sr. had a similar consulting agreement with Med Spa that paid him $2,500 between February and June 2021 through Tryon Capital, a company Coker Sr. controls. Tryon was also Coker Sr.’s vessel of choice for funneling funds from both Hometown International and E-Waste, according to his indictment.
The SEC said the consulting agreements for E-Waste and Hometown International were used to “reap ill-gotten gains from the scheme” and that the consulting services promised were either “unnecessary, not performed, or were in furtherance of the scheme.”
Med Spa, despite its zero revenue, has a long list of consulting agreements. One since-terminated deal paid $4,000 a month to Med Spa’s former president Elliot Mermel through his company, Benzions. The agreement was terminated in 2021.
Mermel, who served as president for both E-Waste and Med Spa Vacations, has a colorful business career, including a company that raised crickets as human food and a cannabis company that partnered with Paul Pierce, the former Boston Celtics superstar.
Med Spa was also briefly led by Patten’s longtime friend John Rollo, another former E-Waste president and a Grammy-award winning producer who worked most recently as a patient transporter at a New Jersey hospital.
Neither Mermel nor Rollo were indicted alongside their associates for the E-Waste fraud allegations. They were succeeded in their Med Spa leadership by Irwin Schneidmill.
Schneidmill declined to comment when contacted by CNBC. Rollo’s phone number, listed by the SEC, had been disconnected, and Mermel did not immediately respond to a request for comment.
Like the other two shell companies, Med Spa Vacations had an initial business goal—in this case, “specialized wellness vacation packages”—that was abandoned in favor of initiating a reverse merger. The indictment notes the E-Waste and Hometown International reverse mergers as the method by which the men would earn “significant profit resulting from market manipulation.”
Med Spa is currently in search of a company with which to complete a reverse merger.