Friday, April 23, 2021

‘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.


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.


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.


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.


  1. Mark:

    This is a too-much-money-sloshing-around problem, right?

    1. Meant to post the comment below as a reply, sorry

  2. Certainly a contributing factor, possibly a necessary condition, but I don't think it's the primary cause of the craziness of 2021. I'd say bigger factors in this case are probably the advent of the post-regulatory age, the decline of financial scrutiny (including attacks on real journalists and the demonization of short-sellers), and the rise of the Robinhooders.