In a federal court hearing on Wednesday, James Patten, a 64-year-old man from Winston-Salem, North Carolina, admitted to his involvement in a large-scale market manipulation scheme. Patten pleaded guilty to securities fraud and conspiracy charges, which were related to orchestrating a plot to profit from stock trades in reverse mergers.

According to authorities, Patten, along with two co-defendants, Peter Coker Sr. and his son Peter Coker Jr., conspired to manipulate stock prices for two companies - Homestead International Inc. and E-Waste Corp. Their alleged scheme involved injecting false information into the marketplace, creating artificial impressions of supply and demand for the securities, all while operating on the OTC Link Alternative Trading System.

The authorities claim that this conspiracy lasted from 2014 to 2022. Patten and the Cokers allegedly employed various tactics to manipulate stock prices, including spreading purchased shares among friends and family trading accounts and gaining access to those accounts through login credentials.

The securities fraud scheme also involved the use of an unsuspecting Paulsboro deli and its CEO, Paul Morina, who was a high school friend of Patten's. The deli, operating under the umbrella company Homestead International Inc., became a front for the elaborate alternative securities trading scheme before Morina was forced out by the alleged conspirators.

As the scheme progressed, Patten and the Cokers engaged in an extensive trading strategy, commonly known as match and wash trades, to artificially inflate stock prices and effect a reverse merger. Federal prosecutors disclosed that Homestead International's stock price surged by a staggering 939%, while E-Waste Corp.'s stock price saw an astronomical increase of 19,900%.

Under the manipulation scheme, Homestead International's share price peaked at over $13 per share, leading to a market value of $100 million. Remarkably, this valuation was for a company that only owned a single asset - the deli. Similarly, E-Waste Corp.'s share price skyrocketed from $0.10 to $10 per share, resulting in a market value of $120 million for a shell company with no revenue.

Patten's sentencing is scheduled for April 23, 2024. Meanwhile, the cases of the two co-defendants, the Cokers, remain pending.

Efforts to reach Patten's attorneys, Ira Lee Sorkin and Adam K. Brody of Mintz & Gold law firm in New York, were unsuccessful at the time of reporting. Sorkin, a renowned white-collar criminal attorney, previously represented Bernie Madoff, known for running the largest financial fraud scheme in U.S. history.

The guilty plea from James Patten marks a significant development in this high-profile market manipulation case. As the investigation continues, authorities will undoubtedly seek justice against those involved in this fraudulent scheme that impacted investors and undermined the integrity of the stock market.