New Jersey deli fraudster James Patten sentenced to prison

James Patten, who played a key role in a stock manipulation scheme that led to a $100 million market capitalization for a company that owned only one money-losing New Jersey deli, was sentenced Tuesday to 21 months in prison.

Patten, 67, asked Judge Christine O’Hearn to sentence him to no time in prison at a hearing in U.S. District Court in Camden, New Jersey, the same court where he had pleaded guilty to securities fraud in December 2023.

But O’Hearn repeatedly cited Patten’s prior federal fraud conviction and related 27-month prison sentence, before saying the Winston-Salem, North Carolina resident deserved another stint locked up for his role in the deli stock fraud.

The judge noted that Patten set in motion the deli scheme while still on supervised release for his prior conviction, less than two years after his release from prison, and while he still owed restitution in the first case.

“This is his idea,” O’Hearn said.

However, the judge said that Patten’s cooperation with federal authorities in investigating the case since his 2022 arrest had been “substantial” and useful in the prosecution of his two co-conspirators, Peter Coker Sr. and Peter Coker Jr., who both pleaded guilty. She also noted his cooperation could help possible future prosecutions against others involved in the scheme.

Patten, a former stockbroker, is the last of three defendants to be sentenced in the securities fraud case involving the deli.

“I stand today before you to apologize, to take full responsibility for my actions,” Patten told the judge.

He choked up as he said he was “deeply sorry” for the effect of his crime on his family, and on youths he coached in wrestling.

“There is no excuse,” he said.

As he walked out of court with his partner and three sisters, Patten told CNBC, “I have no comment.”

In addition to his 21-month prison term, Patten must serve three years of supervised release and is responsible for around $5 million in restitution.

Patten’s co-conspirators, Coker Sr. and Coker Jr., have already served their prison sentences, which were six months and 40 months, respectively.

The U.S. Attorney’s Office in New Jersey had requested that O’Hearn give Patten a sentence of between 12 and 18 months in prison.

“This was a serious offense,” said Assistant U.S. Attorney Aaron Webman.

Patten and the Cokers admitted to plotting to drive up the share price of Hometown International, the company that owned the Your Hometown Deli in Paulsboro, New Jersey, and the share price of a shell company, E-Waste, through manipulated stock trading.

As a result, Hometown and E-Waste’s stock prices were artificially inflated by 939% and 19,900%, respectively, prosecutors have said.

The goal of the scheme was to make both companies more attractive candidates for reverse mergers with private companies that wanted to become publicly traded. Both companies later were used for reverse mergers.

In 2014, Patten suggested the creation of Hometown as an umbrella corporation to a former high school wrestling teammate, Paul Morina, who was discussing opening a deli in Paulsboro at the time with another person. Morina and the other deli owner were unaware of Patten’s scheme to manipulate Hometown’s stock, authorities have said.

Morina is a high school principal and renowned wrestling coach.

Charges were filed against Patten and the Cokers in September 2022, more than a year after CNBC detailed a series of questionable connections between Hometown and E-Waste, Patten’s prior criminal and civil court issues, as well as those of Coker Sr., and consulting deals with the companies that benefited those two men. Your Hometown Deli closed earlier in 2022.

CNBC’s reporting was kicked off by a client letter that hedge fund manager David Einhorn sent clients in April 2021, which highlighted Hometown International’s bizarre stock price given its very meager single asset of the deli.

“The pastrami must be amazing,” Einhorn wrote in that letter.