By Ben Blaschke, asgam.com/AP News
23rd January 2023 – (Phuket) The long-time Chairman of Hong Kong-listed South Shore Holdings Ltd, owner of failed luxury Macau hotel THE 13, has been arrested in Thailand some four months after being charged by the US Department of Justice with stock market manipulation.
James Patten, 63, of Winston-Salem, North Carolina; Peter Coker Sr., 80, of Chapel Hill, North Carolina; and Peter Coker Jr., 53, of Hong Kong, China, are each charged in a 12-count indictment with conspiracy to commit securities fraud, securities fraud, and conspiracy to manipulate securities prices. Patten is also charged with four counts of manipulation of securities, four counts of wire fraud, and one count of money laundering.
According to a report by The Bangkok Post, 54-year-old Peter Coker Jr nicknamed ‘Macao Boy‘ was arrested last Wednesday in a hotel room in Phuket, having been placed on a red and black notice by Interpol. He was tracked down following a joint investigation by Thailand’s Central Investigation Bureau and the US Federal Bureau of Investigation.
Coker, his father Peter Coker Sr and another accomplice, James Patten, were charged last September with securities fraud, conspiracy to commit securities fraud and conspiracy to manipulate securities prices, while Patten was also charged with four counts of manipulation of securities, four counts of wire fraud and one count of money laundering.
Patten and Coker Sr were arrested at the time but Coker Jr, who had been residing in Hong Kong, remained at large until being tracked down in Phuket last week.
According to information released by the US Attorney’s Office in September, the trio orchestrated a reverse merger of two publicly traded companies – Hometown International Inc. and E-Waste Corp – with two private operating companies, then sold the shares of each entity at a significant profit.
“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 US Attorney’s Office said.
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.
As part of the securities fraud scheme, 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 addition, 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% and E-Waste’s stock by approximately 19,900%.”
It was reported at the time that Hometown’s stock holding had soared to 8 million shares at a price of around US$13 per share – despite its only asset being a New Jersey deli with only US$35,000 in sales in the past two years combined.
Coker, who faces up to 45 years in jail and more than US$10 million in fines if convicted, stepped down as Chairman of South Shore Holdings in October. The securities fraud and manipulation of securities prices counts each carry a maximum penalty of 20 years in prison and a $5 million fine. The wire fraud and money laundering counts are punishable by a maximum penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offence, whichever is greatest. 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 offence whichever is greatest.
Thai police said U.S. officials informed them of the 54-year-old Coker Jr.’s possible entry into Thailand in December last year, and he was tracked to his residence near a popular tourist spot of Surin beach in Phuket, for which he signed a one-year-lease. He was arrested 11th January.
The police statement said he had entered Thailand several years ago with a passport from the eastern Caribbean island of St. Kitts and Nevis, which is one of many nations that sells citizenship in exchange for investment.
Teerat Limpayaraya, a prosecutor in Thailand’s Attorney General’s office, said Coker Jr. is being held in a Bangkok jail pending extradition.
“Mr. Coker Jr. voluntarily consented to be extradited to the U.S., which has simplified the court’s legal process. We have to complete a 30-day waiting period as required by Thai law before sending him back,” said Teerat. “He was visibly frail when he was taken in and told us that he needs medical treatment for his liver disease. We believe that he entered Thailand with a possible plan to settle here.”
A video released by the police showed Coker Jr. sitting in a chair wearing a T-shirt and shorts in his seaside residence as Thai police read out details of search and arrest warrants to him. Later, as he was escorted to a police vehicle, he appeared to need assistance walking.
Trading in South Shore shares were themselves suspended since July 2021, shortly after the company applied to the Macao court for voluntary liquidation of its wholly-owned subsidiary New Concordia Hotel Limited, the sole beneficial owner of THE 13 Hotel.
South Shore had been facing pressure from its lenders at the time to repay mounting debts, including a statutory demand issued by one lender demanding payment of HK$3.28 billion (US$423 million) in outstanding loans and interest or face a winding up petition against the company.
In October 2021, South Shore revealed that all of its subsidiaries had ceased operations and were insolvent as it awaited a decision on the possible winding up of the company.
As of South Shore’s most recent update in December, joint and several liquidators are still reviewing the company’s finances to determine whether a potential restructuring is feasible.
The demise of South Shore ultimately emanated from the failure to realize its vision for THE 13 Hotel, located to the south of Macau’s Cotai Strip.
The brainchild of long-departed Chairman Stephen Hung, THE 13 had been envisioned as an uber-luxury hotel with space for 66 VIP gaming tables aimed at capitalising on Macau’s booming VIP segment of the early 2010s. Instead, a series of funding and construction delays saw the property open in September 2018 with no gaming and with a number of rooms unfinished – all at a cost of US$1.6 billion.