Deli stock fraud defendant seeks no prison term in New Jersey case

James Patten, the last defendant awaiting sentencing in the New Jersey deli stock manipulation case, has asked a federal judge to spare him prison time after prosecutors sought a 12- to 18-month term. The case centered on two thinly traded companies whose market values at one point topped $100 million, including one that owned a single money-losing deli in Paulsboro, New Jersey.

Patten’s lawyer, Adam Brody, argued in a filing in New Jersey federal court that his client should receive less time than co-defendant Peter Coker Sr., who was sentenced to six months in jail and six months of home detention. Brody wrote that Patten had been Coker Sr.’s employee during the conduct at issue and said that, if Coker Sr.’s sentence was sufficient punishment, Patten should receive a lesser penalty.

Prosecutors have urged U.S. District Judge Christine O’Hearn to impose a prison sentence when Patten is sentenced on July 21. Their recommended range is well below the 70 to 87 months indicated by federal sentencing guidelines, according to their filing, but they argued that incarceration remains warranted.

Prosecutors said a harsher sentence than those imposed on the Cokers would be unfair, but pointed to Patten’s prior fraud record. Patten was convicted in an unrelated mail fraud case in 2010 and received a 27-month prison sentence. Prosecutors wrote that he was released in 2012, about two years before the conspiracy began, and said his return to fraud so soon after prison was troubling.

Patten, Coker Sr. and Peter Coker Jr. admitted that they took part in a plan to inflate the share prices of Hometown International and E-Waste, two lightly traded companies. The higher prices were intended to make the companies more appealing candidates for reverse mergers, according to court filings.

Hometown International owned Your Hometown Deli, a small business in Paulsboro that was losing money. E-Waste was described in the filings as a shell company without significant business operations. Patten grew up in Paulsboro, where he had been a standout high school wrestler. The deli was run by his friend and former teammate Paul Morina, a high school principal and wrestling coach, who was unaware of the stock manipulation scheme.

Peter Coker Jr. received a 40-month prison sentence for his role in the case. Both he and Coker Sr. have since been released, according to court records cited in the sentencing materials.

Brody’s filing also cited Patten’s remorse, his medical history involving seizures, and his work since pleading guilty in December 2023. The filing said Patten, a Winston-Salem, North Carolina, resident and former stockbroker, has worked as a warehouse materials handler for Coca-Cola and as a part-time handyman at a taproom and brewery.

In a letter to O’Hearn, Patten wrote that when he was released in 2012 he believed he had learned his lesson and would not put himself or his family in that position again. “But I failed,” he wrote. Patten said that within two years of release, he had begun the conduct that brought him back before the court.

Patten also wrote that he felt lost and desperate to regain part of his former life as a broker, but that no reputable firm would hire him. He told the judge he should have refused to join the scheme and said he knew it was wrong.

Several pages of the prosecution and defense sentencing submissions have been redacted for reasons not stated in the public versions.

This story draws on original reporting from CNBC.