Shell companies sure make strange bedfellows.
A New York real estate tax lawyer — who did work for former President Donald Trump decades ago — in 2011 purchased a shell company whose creators later became key investors in a mystery $100 million company that owns just a small New Jersey deli, records show.
The shell company — Europa Acquisition I Inc. — was one of eight shell entities set up in 2010 by Peter Reichard and Peter Coker Sr., the North Carolina-based investors in deli owner Hometown International.
After Reichard and Coker sold them, most of those shell companies — including the one later purchased by Trump’s former real estate tax lawyer Allan Schwartz — ended up having their registrations revoked by the Securities and Exchange Commission for failing to keep current in their disclosure filings, records show.
The shell companies were named in numerical sequence, starting with Europa Acquisition I and ending with Europa Acquisition VIII.
Schwartz, the former Trump lawyer, told CNBC in a phone interview that he knew nothing about Coker Sr. and Reichard, Hometown International, or its deli in Paulsboro, New Jersey, which has minuscule sales. Coker Sr. and Reichard sold the Europa shell months before Schwartz bought it from other entities.
Schwartz, 73, is the latest person with an eyebrow-raising history to pop up in financial records linked to the deli company investors or to entities they were involved in.
Schwartz laughed Monday when a reporter told him details about Hometown International, including its market valuation of $100 million despite owning a South Jersey deli that had sales of less than $37,000 for the past two years.
“I know nothing about it,” Schwartz chuckled after being told that key investors in Hometown International had created a shell company he once owned.
‘Buyer beware’
Schwartz is in good company.
A lot of people have laughed or made jokes about Hometown International since last month, when hedge fund manager David Einhorn first highlighted the deli owner’s preposterous market capitalization, and used it as a warning to retail investors.
“The pastrami must be amazing,” Einhorn racked in an oft-quoted line from that letter.
In recent weeks, CNBC has detailed criminal and regulatory sanctions imposed on people and entities linked to Coker Sr. and Reichard, reported on the investments by Duke and Vanderbilt universities in Hometown International, and revealed details about the opaque nature of a group of Macao-based investors in that company.
Articles also have explored the incongruous professional backgrounds of Hometown’s two executive officers — both of whom are public high school administrators — and the existence of a related shell company. That shell company E-Waste, like the deli owner, has a sky-high stock market capitalization that is not justified by any meaningful business operations.
Those articles led to the termination of consulting agreements in which Hometown International and E-Waste had paid thousands of dollars per month in fees to a firm controlled by Reichard and Coker Sr.
Another firm controlled by the two men, Europa Capital Investments, remains a major investor in Hometown International, as does Coker Sr. as an individual. Coker Sr.’s son, Hong Kong-based Peter Coker Jr., is the deli company’s chairman.
Peter Reichard, a top Perdue aide, takes the oath before his apearance in Wake County Court, Wednesday, December 14, 2011 in Raleigh, N.C.
