New Jersey deli fraud: prosecutors seek lighter Patten sentence, but some reasons remain hidden

Federal prosecutors are recommending a relatively light prison sentence for James Patten, who pleaded guilty to securities fraud in the $100 million New Jersey deli stock manipulation case. They say their reasons for doing so include considerations that are not fully visible in the publicly available filing.

In a new court filing, the U.S. Attorney’s Office for New Jersey acknowledged that the sentencing guidelines suggest a prison term between 70 and 87 months for the 65-year-old defendant.

However, prosecutors urged U.S. District Court Judge Christine O’Hearn to impose a sentence between 12 and 18 months when she sentences Patten in Camden on July 21. Patten has been free pending sentencing since he pleaded guilty in late 2023.

Prosecutors cited federal criminal law, which calls for avoiding “unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct.”

They also pointed out that other men who previously pleaded guilty in the same scheme, father-and-son Peter Coker Sr. and Peter Coker Jr., received prison terms of six months and 40 months, respectively.

The U.S. Attorney’s Office said a sentence more severe than his co-defendants’, particularly Coker Sr.’s, would be unfair.

Both Cokers have already served their sentences for the scheme, which artificially boosted the stock price of two thinly traded companies to make them more attractive candidates for reverse mergers.

One company, Hometown International, owned one small, unprofitable deli in Paulsboro, New Jersey, Your Hometown Deli, which was run by Patten’s friend, a high school wrestling coach, who has not been accused of wrongdoing. Hometown’s market capitalization topped $100 million at one point.

The other manipulated company, E-Waste, had an even higher market capitalization at some point despite being described as a shell company.

Three pages of the 11-page sentencing submission were blacked out. Those pages explain why prosecutors believe O’Hearn should grant Patten a steep downward departure from the advisory sentencing guidelines.

In New Jersey federal court, sentencing submissions are not public unless a request is made. Court rules also require prosecutors and defense counsel to confer to determine what “non-public information should be redacted” before a submission is made public.

Rules on presumptively non-public information include the names of victims, witnesses, and uncharged individuals, as well as information about cooperation by the defendant and others that was not previously disclosed.

The rules also include sensitive personal information about the defendant, such as medical and psychological reports. The nature of the redacted non-public information is not explained in the publicly available version.

One reason prosecutors believe Patten deserves prison time is his criminal record, according to a portion of the submission that is public. Patten, a North Carolina resident, was convicted of mail fraud in 2010 and sentenced to 27 months in prison.

Prosecutors wrote that he was released in 2012, about two years before the conspiracy began, and that a prison sentence is necessary because his return to fraud so soon after serving about two years in prison is troubling.

The U.S. Attorney’s Office did not immediately respond to a request for comment, and Patten’s lawyer, Adam Brody, declined to comment.

Prosecutors noted that investors lost an estimated nearly $5 million, including consulting fees paid to the Cokers and Patten.

In the public section of the filing, prosecutors wrote: “Patten participated in a serious crime — a fraud scheme that resulted in losses of nearly $5,000,000 and he played an important role in that scheme.”

They added that the guidelines account for that already, and that the court should recognize Patten was acting as an employee of Coker Sr. and at his direction.

The filings also stated that there are “at least two other potential defendants” who “will face no legal consequences for their actions.”