Federal Prosecutors Seek Light Prison Sentence for Man Guilty of $100M New Jersey Deli Securities Fraud

Federal prosecutors in New Jersey are requesting a 12-to-18-month prison sentence for James Patten, who pleaded guilty to securities fraud in a $100 million stock manipulation scheme. Despite federal sentencing guidelines suggesting a term between 70 and 87 months, the U.S. Attorney’s Office cited the lighter sentences of co-defendants Peter Coker Sr. and Jr. to justify the reduction, according to court filings obtained by CNBC.

Why are prosecutors recommending a shorter sentence for James Patten?

The U.S. Attorney’s Office for New Jersey is urging U.S. District Court Judge Christine O’Hearn to grant a “steep downward departure” from advisory sentencing guidelines. While the guidelines suggest Patten should serve up to 87 months, prosecutors argue that a harsher sentence would be unfair compared to his co-defendants, according to the filing.

The government noted that Peter Coker Sr. received a six-month sentence and Peter Coker Jr. received 40 months for their roles in the same conspiracy. Prosecutors stated that Patten acted as an employee under the direction of Coker Sr., which they believe warrants a more lenient term of 12 to 18 months.

How did the “Hometown Deli” stock manipulation scheme work?

The fraud involved artificially inflating the stock prices of two companies—Hometown International and E-Waste—to make them attractive for reverse mergers. According to prosecutors, Hometown International’s market capitalization peaked at over $100 million, despite the company owning only one unprofitable deli, Your Hometown Deli, in Paulsboro, New Jersey.

E-Waste, the second company involved, functioned as a shell company but achieved an even higher market capitalization during the manipulation phase. The scheme resulted in nearly $5 million in losses for investors, a figure that includes consulting fees paid to Patten and the Cokers, according to prosecutors noted in their filing.

What is James Patten’s criminal history?

Prosecutors acknowledged that Patten’s history makes a prison term necessary. The North Carolina resident was previously convicted of mail fraud in 2010 and served 27 months in prison. He was released in 2012, roughly two years before the current securities fraud conspiracy began.

In the public portion of the sentencing submission, prosecutors described Patten’s return to fraud so shortly after his previous incarceration as “troubling.”

Who else was involved in the securities fraud?

The primary architects of the scheme were Peter Coker Sr. and Peter Coker Jr. Both have already served their respective sentences. The filings also indicate that at least two other potential defendants were involved but will face no legal consequences for their actions.

While the deli itself was central to the fraud’s facade, the high school wrestling coach who ran Your Hometown Deli has not been accused of any wrongdoing, according to court documents.

Sentencing Comparison: Patten vs. Co-Defendants

Judge Christine O’Hearn is expected to determine the final sentence in Camden. Three pages of the prosecution’s 11-page filing remain redacted, as New Jersey federal court rules allow the withholding of sensitive personal information or details regarding defendant cooperation.