HWIN - SEC charges New Jersey deli owners associate in alleged $100M deli scheme

Three men, including a father-son duo that owned a New Jersey deli, have been charged by the Securities and Exchange Commission in a scheme that led to a $100 million valuation for a deli.

An associate and the owners of Hometown International Inc. ( OTCPK:HWIN ), which operated one deli in Paulsboro, New Jersey,  and a separate shell company, E-Waste Corp., allegedly artificially inflated the price of both stocks to use them to do transactions and ultimately dispose of the shares at "grossly inflated" prices.

Shares off Hometown, where the New Jersey deli reported less than $40,000 in annual revenue,  went from $1/share  in October 2019 to nearly $14 per share by April 2021, leading to a "grossly inflated market capitalization" of $100 million, according to a statement from the SEC.

The charges come after there was a lot of publicity about Hometown International ( OTCPK:HWIN ) earlier this year after famed hedge fund manager David Einhorn discussed the meteoric rise of the stock in an investor letter back in April.

"The pastrami must be amazing," Einhorn wrote in the April letter. "Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious. From a traditional perspective, the market is fractured and possibly in the process of breaking completely."

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