Bankruptcy Weighed : Closure Puts President of Jalisco in Quandary

“I never had this many lawyers,” said Gary S. McPherson, the besieged chief executive of Jalisco Mexican Products Inc. As his legal bills and lawsuits against his company continue to mount and his insurance runs out, McPherson believes that “at some point” he may have to seek protection under federal bankruptcy laws.

“I have no idea what I’m going to do,” he said. “Right now, I’m spending about 12 to 14 hours a day trying to unwind Jalisco.”

McPherson’s company has for weeks been the target of a major investigation stemming from the biggest food poisoning case in California history. Some of Jalisco’s cheese products, purchased largely by Latinos, contained dangerous Listeria monocytogenes bacteria that caused numerous illnesses and deaths, health professionals have concluded.

‘Mid-Life Crisis’

The bearded 44-year-old McPherson, dressed in blue jeans, a brown paisley shirt and sneakers, sat in the living room of his $300,000 condominium in a gated community on the western edge of Pasadena. Close by was his wife, Susan, 45.

Why did the San Marino native, USC graduate and former accountant take a flier on a Mexican-style cheese products company in the first place?

“He was having a mid-life crisis,” his wife asserted.

Actually, McPherson said, he resigned in 1982 from the Pasadena accounting firm where he was a partner to run the cheese firm full time because the food business “is pretty much recession-proof” and “the (Latino) food business at that time was the fastest-growing business in the U.S.”

$750,000 Overhaul

McPherson said he proceeded to spend $750,000 overhauling the Artesia plant, which employed 120 workers. To partly finance those activities, he borrowed $400,000 using the Jalisco real estate as security, according to property records.

In response to a reporter’s question, he said he oversaw the quality of his cheese products “as much as I could control it,” but that the bulk of his time “was basically in administration, sales and promotion.”

Along with his principal partners--Jose Medina, Jalisco’s longtime cheese maker, and Lawrence D. Brown, a Pasadena real estate appraiser--McPherson said he had been expecting to substantially increase the company’s sales from $9.7 million in 1984 to a projected $15 million this year.

Roof Caves In

Then in mid-June, the roof caved in when government investigators told him his products had triggered a major epidemic.

McPherson underscored that he had no suspicion that his firm’s cheese products were contaminated until confronted by health professionals and government investigators.

He said he wanted to set the record straight about who knew what because “there’s been a lot of crap that’s gone around” about whether anyone at Jalisco knew anything about contaminated products before investigators blew the whistle.

“You know,” he said, “Listeria, that was a new word for me, as I think it was for most people in California.”

Smaller Plant Also Closed

Along with the Jalisco shutdown, McPherson said he also had to close down a small Jalisco-owned guacamole plant in Escondido in which, he said, “(Jalisco partner) Larry Brown and myself have lost considerable sums of money.” The decision was purely financial and had nothing to do with the Jalisco contamination problem, he said.

Additionally, Juan Mota, a 49-year-old Riverside resident who founded Jalisco in the late 1960s with just a few thousand dollars in savings, is contemplating legal action against McPherson and his partners.

Mota, who sold the firm in 1981 to McPherson and a group of investors for about $1.2 million, said he had been receiving more than $8,000 a month in interest payments on the sale until the firm was closed in mid-June. Then the payments stopped.

“I’m planning on getting my plant back or foreclose,” Mota said recently.

‘Trying to Work With Juan’

But McPherson contended that legally he controls the property and that he is “trying to work with Juan on this thing. . . . Juan is a good guy. I really like Juan.”

McPherson said that on advice of his criminal attorney he could not talk about any knowledge he might have of how Listeria bacteria got into his cheese products.

Daniel E. Apodaca, a partner in a Pasadena accounting firm where McPherson used to work and who himself once owned a piece of Jalisco, said he touched on that very subject in a recent conversation with McPherson.

“He’s got a lot of theories, but no answers,” Apodaca said.