Feds seek 12-18 months for $100M deli stock fraudster, far below guidelines

Federal prosecutors are recommending a sentence of 12 to 18 months in prison for James Patten, a North Carolina resident who pleaded guilty to securities fraud in the $100 million New Jersey deli stock manipulation case. This is significantly less than the advisory guideline range of 70 to 87 months for the case involving Hometown International and E-Waste.

The other two men involved in the fraud, Peter Coker Sr. and Peter Coker Jr., received prison terms of six months and 40 months, respectively.

Courtroom sketch of James Patten, left, and attorney Ira Sorkin at N.J. District Court in Camden, N.J., Oct. 11, 2022

Federal prosecutors are recommending a relatively light prison sentence for a man who pleaded guilty to securities fraud in the notorious $100 million New Jersey deli stock manipulation case — and some of their reasons are confidential.

The U.S. Attorney's Office for New Jersey, in a new court filing, conceded that the sentencing guidelines suggest a prison term between 70 and 87 months for the defendant, James Patten. However, the office is urging U.S. District Court Judge Christine O'Hearn to sentence the 65-year-old Patten to 12 to 18 months when she sentences him in Camden on July 21. He has been free pending sentencing since his guilty plea in late 2023.

Prosecutors, in a version of the submission made public at CNBC's request, cited federal criminal law, which calls for avoiding "unwarranted sentence disparities among defendants with similar records found guilty of similar conduct." They noted that the other men who previously pleaded guilty in the same scheme, Peter Coker Sr. and Peter Coker Jr., received prison terms of six months and 40 months, respectively.

"A sentence more severe than his co-defendants', particularly Coker Sr.'s, would be unfair," the U.S. Attorney's Office stated.

Peter Coker Sr. and his wife, Susan Coker, at N.J. District Court in Camden, N.J., Oct. 11, 2022

Both Cokers have since served their sentences for the scheme, which artificially inflated the stock prices of two thinly traded companies to make them more attractive for reverse mergers.

• One company, Hometown International, owned just one small, unprofitable deli in Paulsboro, New Jersey — Your Hometown Deli — run by Patten's friend, a high school wrestling coach who has not been accused of wrongdoing. Hometown's market capitalization once exceeded $100 million.
• The other company, E-Waste, had an even higher market cap at one point, despite being merely a shell company.

Three pages of the 11-page sentencing submission by prosecutors are redacted. These pages explain why prosecutors believe O'Hearn should grant Patten a substantial downward departure from advisory sentencing guidelines.

Sentencing submissions are not public in New Jersey federal court unless a request is made to make them public. Court rules state that before a submission is made public, prosecutors and defense lawyers must confer on what "non-public information should be redacted." This includes names of victims, witnesses, uncharged individuals, and "information regarding cooperation by the defendant and others not previously disclosed," as well as "sensitive personal information concerning..."