New Jersey deli scammer James Patten sentencing document filed

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

The U.S. Attorney’s Office for New Jersey acknowledged in a new court filing that sentencing guidelines call for a prison sentence of 70 to 87 months for defendant James Patten.

But the office is urging U.S. District Court Judge Christine O’Hearn to send Patten, 65, who was sentenced July 21 in Camden, to 12 to 18 months in prison. Patten has been free to await sentencing since pleading guilty in late 2023.

In a version of that presentation made public at the request of CNBC, prosecutors cited federal criminal law that calls for preventing “undue sentencing disparities between defendants with similar records and found guilty of similar conduct.”

Prosecutors said father and son Peter Coker Sr., who previously pleaded guilty under the same scheme, and Peter Coker Jr. were sentenced to six months and 40 months in prison, respectively.

“It would not be fair to impose a harsher sentence than that of other defendants, especially Coker Sr.,” the U.S. Attorney’s Office said in its case file. he said.

Both Cokers have since served sentences for the scheme that artificially boosted the stock prices of two thinly traded companies, making them more attractive candidates for reverse mergers.

One of the companies, Hometown International, had a small, unprofitable deli in Paulsboro, New Jersey, run by Patten’s friend, who was his high school wrestling coach and was not charged with any crime: Hometown Deli. The hometown’s market value exceeded $100 million at one point.

The other company whose shares were manipulated in the scheme, E-Waste, had an even higher market value at one point, despite being nothing more than a shell company.

Three pages of the 11-page criminal petition prepared by prosecutors were blacked out.

These pages explain why prosecutors believe O’Hearn should have allowed disgraced former stockbroker Patten a sharp drop from recommended sentencing guidelines.

Sentencing submissions in New Jersey federal court are not available to the public unless a request for their release to the public is made.

Before an application is made public, prosecutors and the defendant’s lawyers will meet to decide what “non-public information needs to be redacted,” according to court rules.

In the rules, “Possibly Non-Public Information” includes the names of victims, witnesses, persons not charged, and “previously undisclosed information regarding the cooperation of the defendant and others.”

It also includes “sensitive personal information about the defendant,” such as medical and psychological reports.

The nature of the nonpublic information redacted is not disclosed anywhere in the public filing.

One reason prosecutors believe Patten deserves prison time is his criminal record, according to a public portion of the application.

The North Carolina resident was convicted of mail fraud in 2010 and sentenced to 27 months in prison.

“He was released in 2012, approximately two years before the beginning of this conspiracy,” prosecutors wrote. “A prison sentence is necessary because it is alarming that he returned to fraud so quickly after nearly two years in prison.”

CNBC asked the U.S. Attorney’s Office and Patten’s attorney for comment on the application.

Prosecutors noted in their filing that Hometown International and E-Waste were later involved in reverse mergers, but investors lost money estimated at about $5 million, including consulting fees paid to Cokers and Patten.

“Patten participated in a serious crime; he participated in and played a significant role in a fraud scheme that resulted in losses of approximately $5,000,000,” prosecutors wrote in a publicly available portion of the filing. he wrote.

“But the Guidelines already explain this, and the Court must recognize that Patten acted as an employee of and at the direction of Coker, Sr.,” the filing said.

The applications also stated that there were “at least two more potential defendants” who “will not face any legal consequences for their actions.”