‘The pastrami must be amazing’

It says something about 2021 that when I read about a scam that drove the valuation of small deli up to $100 million, my first reaction is "just a hundred million?"

A now-disbarred lawyer who pleaded guilty to federal crimes related to shell company scams is listed as an attorney in early financial documents filed by a New Jersey firm whose stock valuation has risen as high as $100 million or more despite owning just a single, small delicatessen.

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In June 2020, Jaclin pleaded guilty to criminal charges of conspiracy and obstruction of justice. Separately, in a related case, the SEC in 2019 entered a final judgment against him “for running a fraudulent shell factory scheme through which sham companies were taken public and sold for a profit,” a press release noted that year.

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Hometown International’s stock, which trades on the over-the-counter market, plummeted by about 33% in the hours after trading began Friday morning. A day earlier, CNBC had published articles about the company’s unusually high market capitalization, which was first noted in a letter hedge fund manager David Einhorn sent to clients.

“The pastrami must be amazing,” Einhorn quipped in his letter.

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Jaclin, who is still serving his sentence of three years of supervised release for his criminal case, did not immediately respond to a request for comment.

The biographies of Morina and Lindenmuth in SEC filings do not mention any prior experience by either of them in the food service industry, a publicly traded corporation, or the financial industry.

Hometown’s deli had sales of just $35,000 or so for the past two fiscal years. The deli was closed from mid-March to early September last year because of the Covid-19 pandemic.

Despite that, its nearly 8 million shares of common stock recently traded at levels of nearly $14 per share, giving it a market capitalization in excess of $100 million.