Leprino Foods Heads to an Epic Cheesy Meltdown

On Monday, November 28, Denver will be host to a real-life Family Feud episode as the Leprino Foods trial gets underway, complete with all of the ingredients for a dramatic meltdown: a reclusive billionaire, simmering tensions in the family going back decades, and a whole lot of mozzarella cheese.

Leprino Foods is a private, Denver-based company that holds monopoly power over the mozzarella cheese industry. It controls as much as 85 percent of the pizza cheese market and is the exclusive supplier for Pizza Hut, Domino’s and Papa John’s.

Leprino’s cheese is also used in products like ham-and-cheddar Hot Pockets, TGIF’s frozen mozzarella sticks, Stouffer's lasagna and Smart Ones baked ziti. The company has even successfully monetized whey, the byproduct of mozzarella production, selling it to Asian lactose markets, Yoplait yogurt and companies making baby formula.

Michael Leprino Sr. and his wife, Susie, opened Leprino in 1950 as a humble grocery in Denver’s Little Italy, selling Italian deli specialties such as ricotta, mozzarella balls and homemade pastas. They had five children, but only two, James and Michael Jr., stayed in the family business.

James, the youngest of the five, spent his childhood next to his father at the dairy counter, rolling out mozzarella balls after school. He joined the family business full-time after high school in 1956. But only two years later, his father was forced to close Leprino because of competition from a grocery store chain.

James, however, saw the growing popularity of pizzerias in his neighborhood and realized that they all needed to source mozzarella cheese (and lots of it). With only $615 in the bank, he and Michael Jr. founded Leprino Foods with a focus on the pizza cheese market. Their timing was perfect, as the pizza-chain boom was just starting. Over the next five years, Pizza Hut, Little Caesars and Domino’s sprang up, creating a huge demand for low-cost, mass-produced pizza cheese.

Today, Leprino Foods is a multibillion-dollar company with more than 5,000 employees worldwide and a $600 million, 100-acre state-of-the-art manufacturing facility in Greeley. It is still family-owned, giving James Leprino a net worth of $3.6 billion, according to Forbes, and making each of the other five shareholders multi-millionaires.
But with the company's success has come simmering family tensions between the two brothers. James and his two daughters, Terry Leprino and Gina Vecchiarelli, own 75 percent of the company’s shares. In November 2014, Michael Jr. was forcibly removed from the company’s board of directors; when he died in 2018, his 25 percent of the company’s shares was distributed among his three daughters, Nancy, Mary and Laura. Leprino representatives pressured the three sisters to claim that their shares were worthless during the ensuing estate proceedings, according to court documents; they refused, knowing that doing so would take away their power in future negotiations.

Instead, Nancy and Mary sued James and his two daughters. At the center of the case is a special distribution of tax-free money made to shareholders in 2017: a total of $405 million went to James and his daughters and another $135 million went to Michael Jr.’s daughters, according to the lawsuit.

Dividends and distributions were rare for the private company, which had a policy of reinvesting all profits back into the company for growth and expansion. James and his daughters used their majority shareholder votes to push through a deal that allowed them to use the company as a personal piggy bank, loaning back the $405 million at an interest rate of 2.68 percent, according to the complaint.

In their suit, Nancy and Mary allege that their uncle and cousins deliberately misled them about the company’s financials and withheld disclosures that they are legally entitled to receive.

On November 15, Judge Stephanie L. Scoville responded to a request for summary judgment by ruling that the trial should go forward on the basis of substantial evidence of a breach of fiduciary duty by James Leprino and his daughters. She specifically highlighted the event in which Leprino company lawyers pressured Nancy and Mary to claim their shares as “worthless,” and noted that Leprino Foods has not held an annual shareholder meeting for about five years, which violates Colorado law.

The judge did, however, take dissolution of the company off the table, saying that the plaintiffs could instead request monetary damages based on the alleged breach.

Leprino Foods and the lawyers for both sides did not respond to requests for comment on the case.

This won’t be the first time Leprino Foods has gone to trial. Over the past decade, the company has been named a defendant in multiple class-action suits alleging everything from wage withholding to discrimination, according to a 2019 CPR story. The cases have met with mixed results, and the family has consistently declined to comment on them.

In fact, James Leprino is so private that there is only one publicly available photograph of him online, and he has given just one interview, to Forbes in 2017, in which he makes it clear that he wants his two daughters to take over.

They'd be taking over a monopoly that's able to leverage its biotechnology patents to provide its pizza customers the quality, quantity, price and customization they desire. For example, the Quality Locked Cheese, which Leprino patented in 1986, saves pizza chains endless hours and lots of money by providing pre-shredded and individually frozen portions of mozzarella cheese.

It's undeniable that James Leprino has found immense professional success. It's his family's personal problems, however, that now threaten his highly coveted privacy and secrecy. As this case goes to trial, family members will have to testify under oath about their familial and business gripes in front of a judge, jury and the general public. And at the center of it all will be the big cheese himself.