The Deli Was Allegedly a Fraud

The more I learn about the deli, the less I understand it. The deli is (was) of course Your Hometown Deli, a deli in Paulsboro, New Jersey, that opened in 2015 and closed this August. During most of its seven-year run, Your Hometown Deli was also the only business of a US public company called Hometown International Inc., which means among (many) other things that you can read its financial statements online. It had annual revenue that got as high as $76,213 in 2016 (dollars in dollars) and as low as $13,976 in 2020 (“The Company was forced to temporarily close the delicatessen due to the stay-at-home order issued by the Governor of New Jersey on March 9, 2020, resulting from the outbreak of COVID-19.”). It never managed to turn a profit,1 but to be fair it is hard to pay the expenses of being a public company — securities filings, audited financials, etc. — with five digits of revenue.

But the advantage of being a public company is that you have publicly traded stock, and Hometown International did.2 In April 2021, hedge fund manager David Einhorn pointed out that (1) Hometown International’s equity market capitalization was over $113 million, (2) that was really weird and (3) “the regulators — who are supposed to be protecting investors — appear to be neither present nor curious.” We all had a good laugh about the deli, and the regulators noticed too. On Monday, the US Securities and Exchange Commission and federal prosecutors in New Jersey brought securities fraud charges against three men involved in running the deli. Or, rather, in running Hometown International, the publicly traded company. I don’t think they made the sandwiches.