Courtroom sketch of James Patten (left) and attorney Ira Sorkin in New Jersey District Court in Camden, New Jersey, October 11, 2022
Source: Elizabeth Williams
Federal prosecutors are recommending a relatively light prison sentence for a man who pleaded guilty to securities fraud in the infamous $100 million manipulation case for New Jersey deli stocks, but their reasons for doing so are partly hidden.
In a new court filing, the New Jersey U.S. Attorney’s Office acknowledged that sentencing guidelines suggest a sentence of 70 to 87 months in prison for defendant James Patten.
But the agency is asking U.S. District Judge Christine O’Hearn to send Mr. Patten, 65, to 12 to 18 months in prison when he is sentenced July 21 in Camden. He has been released pending sentencing since pleading guilty in late 2023.
In its filing, released at CNBC’s request, prosecutors cite federal criminal law to avoid “unreasonable sentencing disparities among defendants with similar backgrounds who have been convicted of similar conduct.”
Prosecutors noted that other men who previously pleaded guilty in the same scheme, father and son Peter Coker Sr. and Peter Coker Jr., received six and 40 months in prison, respectively.
“A sentence greater than that of his co-defendants, particularly Coker Sr., would be unfair,” the U.S. Attorney’s Office said in a filing.
Peter Coker Sr. and his wife Susan Coker on October 11, 2022 in New Jersey District Court in Camden, New Jersey.
Source: Jerry Frazier and Vinny Castaldo
Both Mr. Cokers have since served time in prison for the scheme, which artificially inflated the stock prices of the two companies, which had small trading volumes, to make them more attractive candidates for a reverse merger.
One of the companies, Hometown International, operated a small, unprofitable deli called Your Hometown Deli in Paulsboro, New Jersey. It was run by a friend of Patten’s, a high school wrestling coach who has not been accused of wrongdoing. Hometown’s market capitalization at one point exceeded $100 million.
E-Waste, another company whose stock price was manipulated in the scheme, had an even higher market capitalization at one point, even though it was just a shell company.
Three pages of the 11-page sentencing document submitted by the prosecution are blacked out.
These pages explain why prosecutors believe O’Hearn should sentence Patten, a disgraced former stockbroker, significantly below the advisory sentencing guidelines.
In New Jersey federal courts, sentencing submissions are not made public unless requested to be made public.
According to court rules, before a submission is made public, prosecutors and defense attorneys are supposed to consult to determine “what nonpublic information should be redacted.”
The rules state that “information that is presumed to be non-public includes the names of victims, witnesses, individuals who have not been charged, and previously undisclosed information regarding the cooperation of defendants and others.”
It also includes “sensitive personal information about the defendant” such as medical and psychological reports.
The nature of the non-public information redacted is not disclosed anywhere in the public filings.
One reason prosecutors believe Patten deserves prison time is his criminal history, according to the public part of the filing.
The North Carolina resident was convicted of mail fraud in 2010 and sentenced to 27 months in prison.
Peter Coker Jr. (left) is served a search warrant by police at his villa on the resort island of Phuket in southern Thailand on January 11, 2023.
Royal Thai Police Crime Suppression Division | AP
“He was released from prison in 2012, approximately two years before this conspiracy began,” prosecutors wrote. “The fact that he returned to fraud so soon after serving almost two years in prison is problematic and requires a prison sentence.”
The U.S. Department of Justice did not respond to a request for comment.
Patten’s lawyer, Adam Brody, declined to comment.
Hometown International and E-Waste later engaged in a reverse merger in which investors lost an estimated $5 million, including consulting fees paid to Cokers and Patten, prosecutors said in filings.
“Patten was involved in and played a key role in a serious crime, a fraud scheme that resulted in losses of nearly $5 million,” prosecutors wrote in part of the filing.
“However, the guidelines already account for this, and the court should find that Patten was acting as an employee of Coker Sr. and at his direction,” the filing states.
The filing also says there are “at least two other potential defendants” who “will not be held legally responsible for their actions.”
