Hidden Rationale: Feds Seek Lenient Sentence for $100 Million NJ Deli Fraudster James Patten

In a surprising turn, federal prosecutors are advocating for a significantly reduced prison sentence for James Patten, who admitted guilt to securities fraud in the infamous $100 million New Jersey deli stock manipulation scheme. Intriguingly, much of the rationale behind this leniency remains under wraps.

A recent court submission from the U.S. Attorney's Office for New Jersey acknowledges that typical sentencing guidelines would mandate a prison term of 70 to 87 months for Patten.

However, the prosecution is actively pushing U.S. District Court Judge Christine O'Hearn to impose a sentence of just 12 to 18 months on the 65-year-old Patten during his Camden sentencing on July 21. Patten has been out on bail since his guilty plea in late 2023.

In a public version of their filing, released after a request from CNBC, prosecutors referenced federal criminal law's emphasis on preventing "unwarranted sentence disparities." They highlighted that Patten's co-conspirators, father-and-son duo Peter Coker Sr. and Peter Coker Jr., previously received sentences of six months and 40 months, respectively, after also pleading guilty to their roles in the fraud.

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

The Cokers have already completed their prison terms for orchestrating the scheme, which involved inflating the stock prices of two obscure, thinly traded companies to facilitate lucrative reverse mergers. One of these entities, Hometown International, famously owned merely a single, unprofitable deli named Your Hometown Deli in Paulsboro, New Jersey. Despite its meager operations, run by a friend of Patten's (who faces no charges), Hometown's market capitalization soared past $100 million at its peak.

The second company caught in the manipulation, E-Waste, achieved an even greater market capitalization, despite its true nature as a mere shell company.

Notably, three pages of the prosecutors' 11-page sentencing submission remain heavily redacted, obscuring significant details.

These blacked-out sections ostensibly contain the full explanation for why prosecutors believe Judge O'Hearn should grant Patten, a disgraced former stockbroker, a substantial downward deviation from the standard advisory sentencing guidelines.

Sentencing submissions in New Jersey federal courts are not automatically public, requiring a specific request for their release.

Court protocols dictate that prior to public release, prosecutors and defense counsel must agree on what "non-public information" needs redaction. This typically includes sensitive data such as names of victims, witnesses, uncharged individuals, and any previously undisclosed information about cooperation by the defendant or others.

Furthermore, the rules also cover "sensitive personal information concerning the defendant," including medical and psychological evaluations.

Crucially, the publicly available portions of the filing offer no clues as to the specific nature of the redacted non-public information.

Despite the push for leniency, Patten's criminal history is cited in the public filing as a reason he still warrants prison time. The North Carolina resident was previously convicted of mail fraud in 2010, serving 27 months in prison.

Prosecutors highlighted that Patten was released in 2012, merely two years before the current conspiracy commenced. "A prison sentence is necessary because his return to fraud so soon after spending approximately two years in prison is troubling," they stated.

Requests for comment from the U.S. Attorney's Office went unanswered, and Patten's lawyer, Adam Brody, chose not to comment.

Despite the subsequent reverse mergers involving Hometown International and E-Waste, prosecutors noted in their filing that investors collectively lost nearly $5 million, a sum that included consulting fees pocketed by the Cokers and Patten.

"Patten participated in a serious crime — a fraud scheme that resulted in losses of nearly $5,000,000 and he played an important role in that scheme," prosecutors acknowledged in a public section of the filing. However, they quickly added, "But the Guidelines account for that already, and the Court should recognize that Patten was acting as an employee of Coker, Sr. and at his direction."

The filings further revealed that "at least two other potential defendants" involved in the scheme are expected to face no legal repercussions.