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Amid Deceptions, Family Winery Goes Sour : Commerce: In 1973, Angelo Papagni's business was flourishing. Then things went bad. Now the 72-year-old vintner is in prison for trying to pass off cheaper wine as more expensive varieties.

November 17, 1993|DAN BERGER | TIMES WINE WRITER

MADERA, Calif. — Where there once was wine and prosperity, there now are only tears.

One of those tears formed in the corner of Angelo Papagni's left eye as he sat in his sparsely furnished office, a former packing shed only half a mile down the road from the stylish, modern winery he used to run.

At 72, Papagni was about to go to federal prison for trying to pass off cheap wine as more expensive white Zinfandel.

A judge sentenced him last year to 18 months, but delayed imposing the sentence until Papagni's son--who was also convicted--could complete his prison term and return to take over the D. Papagni Fruit Co.

Angelo Papagni turned himself in Monday to authorities at Lompoc federal prison, a minimum-security facility housing many white-collar criminals.

"I know I shouldn't have done it," he said a few days before surrendering. "My business was failing."

It was a far cry from his company's heyday in the mid-1980s, when 2,500 acres of wine grapes produced 300,000 cases of wine a year, and the winery recorded gross annual sales of $12 million.

Papagni constructed his gleaming, state-of-the-art winery at Madera in 1973. It became the first San Joaquin Valley winery to put out top-rate varietal wines--those made from specific grape types, rather than blends--using the vineyard's name on the label. Papagni also made sparkling wine and a range of excellent dessert wines.

"They were good days," he said.

Things started to sour when Papagni expanded his winery, then was unable to repay money that he had borrowed at high interest rates in the early 1980s. He became desperate for cash.

By 1987, federal prosecutors would later charge, he had begun deceiving his customers. For three years, they said, he mislabeled cheaper Barbera wine and sold it as higher-quality, more expensive white Zinfandel.

Even that did not save the business. Papagni, failing to satisfy the demands of his creditors, sought protection under bankruptcy laws. He closed the winery in the fall of 1988, gave up title to almost 2,000 acres of land, turned over income from the sale of crops, grape concentrate and wine to creditors, and closed an affiliated bottling company operated by three daughters.

Then he moved his offices to a modest, low-lying former packing shed.

The Papagni firm emerged from bankruptcy in January, 1989. It was on the mend when, in 1991, state agriculture officials discovered discrepancies on the Papagni books between grape purchases and sales of wines from various kinds of grapes. The state filed a civil suit, claiming that Papagni had illegally sold Barbera as Zinfandel.

Papagni defended himself by saying that the wineries he misled were given the chance to buy real white Zinfandel instead of the mislabeled Barbera blend. "I sent samples of Zinfandel and (mislabeled and equally priced) Barbera to both wineries and they chose the Barbera," he said. "They got a better wine."

Eventually he pleaded guilty and paid a fine of about $270,000.

Last year, the federal government filed criminal charges, including mail fraud and conspiracy, against the business, claiming that Papagni and his son, Demetrio, mislabeled some wine tanks.

The elder Papagni said he was shocked at the new charges because he had already paid a fine to the state. He decided to plead guilty and hope for a light sentence.

He was wrong.

Assistant U.S. Atty. R. Steven Lapham, charging that the crime was willful and involved possibly millions of dollars, sought substantial jail time, comparing the case to charges filed against wine brokers Nick and Frank Bavaro, who were accused in 1989 of multiple charges involving millions of dollars worth of grapes. The Bavaros were convicted and sentenced to prison terms of 21 and 15 months in jail, respectively.

Papagni's attorney, Robert Patch of Fresno, argued that the government's estimate of the money involved was greatly inflated.

In federal court in Fresno last year, Judge Oliver Wanger imposed the 18-month sentence, the lowest possible under the federal government's mandatory minimum sentencing guidelines. He fined Papagni $25,000. Demetrio Papagni was sentenced to six months in a halfway house and fined $10,000. The son completed his sentence months ago, setting the stage for the father's prison term to begin. The business that the son now runs has annual revenues of only $4 million, a third of its peak days.

Papagni's guilty plea prompted the federal Bureau of Alcohol, Tobacco and Firearms to permanently bar both him and his son from making wine again.

"I had debts to unsecured creditors," the father said a few days ago. "I didn't want to go out of business without paying them, the people who did ordinary business with me every day. I didn't want to hurt them."

On the day Angelo Papagni was sentenced last year, there was a telling exchange of remarks between him and the judge.

"Am I going to be better off in prison?" Papagni asked Wanger rhetorically. "No, I don't think so. I'm gone. I'm hurt hard enough now. What else can I get? What damage? Just further humility upon my deeds that I did. I'm confessing that I did a wrong. I made a poor judgment and I should not have. And I'm sorry for that."

"You say it won't punish you any more than you have punished yourself," the judge said. "I suspect that that is true."

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