Last week, hedge fund manager David Einhorn wrote a letter mentioning the backwards nature of certain parts of the stock market. He highlighted a security called Hometown International Inc. (OTC:HWIN), a company with a market cap above $100 million but a two-year sales of just $35,000. This company only owns a deli called Your Hometown Deli in Paulsboro, N.J. and nothing else.
Now, with news of key shareholders' involvement in criminal business, many people wonder if money laundering is the sole reason for the deli's existence.
Updates show illegal activity with key Your Hometown Deli shareholders.
The web of criminal ties to Your Hometown Deli is extensive. President and CEO Paul Morina is also the principal and head wrestling coach for the local high school. Chairman Peter Coker Jr. is the son of key shareholder Peter Coker Sr, who has more than 63,000 shares.
Your Hometown Deli pays Coker Sr.'s company, Tryon Capital, $15,000 per month for consulting fees. Coker Sr. has a storied past, with lawsuits against him for business fraud and attempting to hide money from creditors. American Express Bank sued him for about $900,000 in debt that he was solvent on.
Coker Sr. was also arrested in Allentown, Pa. in 1992 for exposing himself and attempting to prostitute young girls outside of their home next to an elementary school. In the same year, he was sued by a company that owns Unclaimed Freight (a furniture store he was once vice president of) for taking more than $1 million from the business.
Tryon Capital partner Peter Reichard was convicted of illegally distributing campaign money to former North Carolina Governor Bev Perdue. Reichard's biological father was early LSD advocate and spiritual leader Ram Dass, although Reichard didn't learn that until he took a DNA test in 2009.
Reichard and Coker Sr. have another firm, Europa Capital Investments, which also owns shares in Hometown Deli. Other key investors are firms in Hong Kong and China. In both locations, all of the invested firms are on the same floor in the same building.
Former Your Hometown Deli lawyer Gregg Jaclin is now disbarred based on an SEC investigation that showed he was involved in shell company scams. The current auditors are Liggett & Webb, who were recently fined by the Public Company Accounting Oversight Board.
Tryon Capital financial analyst James Patten also formerly wrestled with Hometown CEO Morina. Patten is now barred by FINRA for associating with broker-dealers.
How HWIN stock is responding to the news
Since the news released additional information about criminal ties and potential money laundering, Your Hometown Deli stock has sunk more. The shares have dropped more than 17 percent since the market opened on April 20. The past month has brought a 20 percent sell-off.
Will Your Hometown Deli get delisted from the OTC exchange?
Reports suggest that an FBI investigation of Your Hometown Deli has been underway for months. Even with Hometown's numerous criminal connections, the FBI will need to prove wrongdoing and convict the company of money laundering in order to get HWIN stock delisted from the OTC exchange. If the stock was listed on a domestic exchange, it would be a lot easier to get it off the market because the Nasdaq and NYSE tend to have stricter rules.