Discount Dynasty

He euphemistically refers to the deer camp as his "eating trip," since, legally, he can't own a firearm.

"The felony," he volunteers. "I can't vote, either."

Of the things the intensely private Franzia prefers not to talk about, no subject rankles him more than his 1993 federal indictment on a conspiracy-to-defraud charge in which he and Bronco were accused of passing off crushed grapes costing between $100 and $200 a ton as zinfandel grapes worth a dozen times as much. According to the indictment, Franzia scattered zinfandel leaves on top of nonzinfandel grapes as they lay in bins waiting to be crushed.

The result of a yearlong surveillance operation in which 17 Central Valley grape growers and their employees were ensnared (five were sent to jail), the charges alleged that the "victims" of the crime were unsuspecting consumers, who the government contended paid some $55 million for wine that was not as it was advertised.

Franzia pleaded guilty and paid a $500,000 fine (the company pleaded no contest and was fined $2.5 million). As part of the plea arrangement, he was banned from Bronco's stewardship for five years, unable to participate directly in grape-growing or winemaking operations. He was, however, allowed a reduced role as the company's chief financial officer. "I was the big guy, and somebody had to take the fall," he says, dismissing his guilty plea as "just another business decision" to protect Bronco from further harm.

The man who prosecuted Franzia, Assistant U.S. Attorney Steven Lapham of Sacramento, says the government didn't press for a trial after having problems getting potential witnesses to cooperate. "People were taking the Fifth Amendment all over the place on even the simplest questions, such as, 'Do you work at Bronco?'" he says. "We did the best we could." Jack Hart, 78 and retired, who got to know Franzia well as a banker to the wine industry with Bank of America in San Francisco, and who professes to like him personally, has a different take. "Freddy was able to buy his way out of jail, but he's been punished in other ways," he says. "The indictment damaged his credibility, and it'll always give his critics something to hurl at him."

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In 2002, when Trader Joe's patrons began hauling away Charles Shaw wine by the case, no one was more surprised than Charles Shaw.

A Chicago software developer, Shaw, 61, long ago owned a small winery beside the Napa River near the town of St. Helena. After attending business school at Stanford in the 1960s, he went to France as an investment banker and became enamored of vineyards. In 1974 he and his wife, Lucy, settled in Napa Valley. They built a Nantucket-style house for themselves and their five children among rows of newly planted gamay Beaujolais grapes and converted an old hay barn into the Charles Shaw Winery.

But after a nasty divorce, his vintner's dream ended in bankruptcy. In 1994, the house and winery were auctioned off on the Napa courthouse steps for a pittance -- $1.6 million -- to a wealthy businessman and his wife. (They renamed the place Benessere Vineyards.)

The Charles Shaw trademark, however, wasn't part of the sale.

Amid little fanfare, it had been scooped up from bankruptcy court a few months earlier. "Considering that he had gone belly up, the Charles Shaw name seemed practically worthless," recalls vintner Tom Eddy, appointed by the bankruptcy trustee to help manage the property during the proceeding. Shaw's creditors were getting antsy, and Eddy says he suggested that the trustee sell the trademark "as a way of giving them a little something" while waiting for the disposition of the estate. "There was only one guy in the world I thought might be interested in buying a defunct Napa wine label, and that was Fred Franzia," he says.

For the relatively insignificant sum of $18,000, Franzia got the Charles Shaw name and about two dozen leftover cases of the failed winemaker's precious gamay, Eddy says. Franzia did nothing with the label for the next nine years; in fact, only a handful of people even knew he owned it. (Shaw and his ex-wife had no idea.) Then came the exclusive deal with Trader Joe's. California wines had long been sold for the equivalent of $2 a bottle or less in jugs and boxes, but Franzia's Charles Shaw wines appeared more upscale, packaged in conventional bottles with cork enclosures just like pricier wines.

The "new" Charles Shaw wine (bearing little resemblance to the premium vintage for which its namesake had attained respect, if not commercial success) hit the shelves in February 2002. At less than $24 for a case of 12 bottles, it sold as quickly as Bronco could bottle it, based almost entirely on word-of-mouth. There was no advertising campaign. Even Harvey Posert, a longtime marketing consultant to Franzia who is probably most responsible for the invaluable if seemingly unflattering "Two Buck Chuck" nickname, concedes that the wine "largely sold itself."