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Basically come up through the bottom (and out through the face-side of the sheath), skip a hole and go through to the back. From the back, come up through the skipped hole to the face again, making sure your needle comes up on the desired side of the thread. It doesn't really matter which side it comes up on, as long as you're consistent with it for every stitch. Skip and hole again and repeat. The patterned stitch will only be on one side. The other side will look like a regular saddle stitch.
Here's an older sheath I did this way with a bit tighter of a hole pattern:
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A saddle stitch is probably the strongest you can do, but this is a nice decorative touch as well.
--nathan