Bailout of Napa wine shrine flawed; Copia was broke and had violated tax rules
Lew negotiated a $224,737 settlement and sale of some land, the agreement and a copy of a Copia check, dated April 19, 2007, show. Copia's tax-exempt status was preserved.
Turmoil at the top
Meanwhile, Copia was going through administrative turmoil. As Lew negotiated with the IRS, Copia president Arthur Jacobus cut 28 of his 85 staff members, paring costs by $3 million a year.
Then, between I-Bank's approval of Copia's bailout in April 2007 and the deal being finalized in August, Copia chief operating officer Kurt Nystrom was dismissed , his six-figure salary redirected into the center's programs, according to Nystrom and Copia officials.
Jacobus, who signed the final bond papers, was fired eight months later, this past March, as were six people in marketing, including Vice President Larry Tsai.
Now, says Joseph Peatman, a Napa attorney who became Copia's board chairman this spring, the center is trying to put its problems behind it.
In a March news release announcing that former board chairman Garry K. McGuire Jr. was the new president, Copia's public relations firm trumpeted the center's plan for growth and a renewed focus on wine.
After his appointment, McGuire told the Napa Valley Register that Copia had broken even for the first time in 2007. Yet a review of its financial statements indicates large losses and negative cash flows for that year.
Asked to reconcile the two, McGuire told The Bee that he had meant to say that Copia "almost" broke even if you match operating revenues against expenses, numbers that exclude its debt service costs and its bond payments.
McGuire also said Copia is in discussions with a major real estate developer to build a retail center and four-star boutique hotel nearby. McGuire wants to increase online sales from Copia's gift shop and said he is exploring a deal with the Food Channel to syndicate the center's DVD productions on wine and food.
But, board chairman Peatman acknowledged, the struggle to break even continues.
"The whole concept to have Copia as a museum for wine, food and art was flawed," he said. "The focus now is: Can it survive? It's been pretty much insolvent since the beginning."
