Feds seek lenient 12-18 month sentence for $100M deli stock fraudster James Patten

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 for doing so remain hidden from public view.

Key Details

• Defendant: James Patten, 65, a North Carolina resident
• Charge: Securities fraud
• Recommended sentence: 12 to 18 months in prison
• Advisory guidelines range: 70 to 87 months
• Sentencing date: July 21, before U.S. District Court Judge Christine O'Hearn in Camden, New Jersey
• Status: Free on bond since his guilty plea in late 2023

Co-Defendant Sentences

Two other men previously pleaded guilty in the same scheme:

• Peter Coker Sr. — received a 6-month prison sentence
• Peter Coker Jr. — received a 40-month prison sentence

Both Cokers have since served their sentences.

Prosecutors' Rationale

In a court filing made public at CNBC's request, the U.S. Attorney's Office for New Jersey cited federal criminal law calling for avoiding "unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct."

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

The Scheme

The fraud artificially boosted the stock prices of two thinly traded companies to make them more attractive candidates for reverse mergers:

• Hometown International: Owned 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. Its market capitalization topped $100 million at one point.
• E-Waste: A shell company that at one point had an even higher market capitalization.

Redacted Information

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

Under federal court rules in New Jersey, sentencing submissions are not public unless a request is made. Before a submission is made public, prosecutors and defense counsel must confer to determine what "non-public information should be redacted."

"Presumptively Non-Public Information includes" names of victims, witnesses, uncharged individuals, and "information regarding cooperation by the defendant and others that was not previously disclosed," along with "sensitive personal information."

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