I figured it out if anyone is interested. Its dead coral tissue. Apparently when you frag a tree leather, when the wound heals it will create a hard spot which actually makes it really easy to glue it to a plug. I usually pop a tooth pick through the coral and then use a rubber band to hold the toothpick to the frag disc, but sometimes the toothpick will pull through the coral. This dead tissue developed around the tear.
The tissue inside of a leather coral is fibrous, and when the fibers dry out you get what is in the pics above. They will fall off the coral, and in this case form a little pile at the base. I figured this out because I checked on a piece today that I fragged last week and the toothpick had pulled through it and the coral was covered in these rice like things around the wound.
The More You Know.... (≡≡≡☆)