Courtroom sketch of James Patton, left, and attorney Ira Sorkin at the NJ District Court in Camden, NJ, 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 notorious $100 million New Jersey Daily stock manipulation case — and some of their reasons for doing so are hidden.
US Attorney’s Office for New JerseyIn a new court filing, it was acknowledged that sentencing guidelines suggest a prison term of between 70 and 87 months for the defendant, James Patton.
But the office is urging U.S. District Court Judge Christine O’Hearn to send Patton, 65, to prison for a term of 12 to 18 months when she sentences him on July 21 in Camden. He is awaiting sentencing after pleading guilty in late 2023.
In a version of that submission made public at CNBC’s request, prosecutors cited federal criminal law that seeks to “avoid unfair sentencing disparities between defendants with similar records who have been found guilty of similar conduct.”
Prosecutors noted that other men who previously pleaded guilty in the same scheme, father-son duo Peter Coker Sr. and Peter Coker Jr., received prison sentences of six months and 40 months, respectively.
“A more severe sentence than his co-defendants, particularly Coker, Sr., would be inappropriate,” the U.S. Attorney’s Office said in the filing.
Peter Coker Sr. and his wife, Susan Coker, in NJ District Court in Camden, NJ, October 11, 2022
Source: Jerry Frazier and Vinnie Castaldo
Both Cokers have since served their sentences for the scheme, which artificially boosted the stock price of two thinly traded companies to make them more attractive candidates for a reverse merger.
One of the companies, Hometown International, owned just one small, unprofitable deli – Your Hometown Deli – in Paulsboro, New Jersey, which was run by Patton’s friend, a high school wrestling coach who was not accused of wrongdoing. Hometown’s market capitalization topped $100 million at one point.
The second company, whose shares were manipulated in the e-waste scheme, despite being nothing more than a shell company, once had an even higher market cap.
Three pages of the 11-page sentencing presentation filed by prosecutors have been blacked out.
Those pages reveal that prosecutors believe O’Hearn should give disgraced former stockbroker Patton a steep exemption from advisory sentencing guidelines.
Sentencing submissions in New Jersey federal court are not public unless a request is made to make them public.
Court rules state that before a submission is made public, the defendant’s prosecutor and attorneys will consult to determine “what non-public information should be redacted.”
Presumptively nonpublic information includes “names of victims, witnesses, exonerated persons” and “information about cooperation by the defendant and others that has not previously been disclosed,” the rules state.
It also includes “sensitive personal information relating to the defendant” such as medical and psychological reports.
The nature of the amended non-public information is not disclosed anywhere in the public filing.
One reason prosecutors believe Patton deserves prison is his criminal record, according to a public section of the presentation.
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 southern resort island of Phuket, Thailand, on January 11, 2023.
Crime Suppression Division, Royal Thai Police | AP
“He was released in 2012, approximately two years before the beginning of this conspiracy,” prosecutors wrote. “A prison sentence is necessary as his return to fraud so soon after spending almost two years in prison is disturbing.”
The U.S. Attorney’s Office did not immediately respond to a request for comment.
Patton’s attorney, Adam Brody, declined to comment.
While Hometown International and E-Waste later joined in the reverse merger, investors lost about $5 million, including consulting fees paid to the Cokers and Patton, prosecutors noted in their filing.
“Patton participated in a serious crime – a fraud scheme that resulted in the loss of approximately $5,000,000, and he played a significant role in that scheme,” prosecutors wrote in part in the public filing.
“But the guidelines already address this, and the court must assume that Patton was acting as Coker, Sr.’s employee and at his direction,” the filing said.
The filing also says there are “at least two other potential defendants” who “will face no legal consequences for their actions.”