I have read a couple crazy definitions of this phrase, but my father - David H. Stocky - Used it to say it when people were really greedy - like cheated him, or tried to get on over on him, and it wasn't worth pummeling them, he would say "Choke on it" to mean that he hoped their greed and unscrupulous behavior came back to them.
Suzy stole my last cookie again, she can choke on it.
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