On July 12, 2000, at 1130 hours Pacific daylight time, a Piper PA-38-112, N2466D, lost engine power while conducting a go-around after a simulated engine out procedure at the Selma Airport, Selma, California. The airplane subsequently touched down in a vineyard and collided with ground obstructions. The airplane was operated by Golden Eagle Enterprises, Inc., d.b.a. Mazzei Flying Service, under 14 CFR Part 91 as an instructional flight. The airplane sustained substantial damage. The certified flight instructor (CFI) and student pilot were not injured. Visual meteorological conditions existed for the instructional flight, and no flight plan was filed. The flight was scheduled to terminate at the Fresno Yosemite International Airport, Fresno, California. In an interview with an investigator from the Safety Board, the CFI stated that they had been practicing simulated engine out procedures at Selma that concluded with the student pilot performing a touch-and-go takeoff. He stated that company procedure was to switch to the fullest tank prior to takeoff. He further reported that the process for conducting the engine out maneuver was to reduce the throttle, and conduct the emergency checklist. No discrepancies were noted with the first two engine out maneuvers. On the third engine out, at 1,700 feet above ground level (agl), the CFI reduced the throttle, and the student descended to the runway. On the takeoff, the student pilot switched the fuel selector handle, and the engine quit. The CFI took the flight controls, retracted the flaps, switched the fuel selector handle back to its original position, and made an unsuccessful attempt to restart the engine. The CFI reported that he made an off airport landing in a vineyard at the departure end of the runway. The airplane was inspected on-scene by a Federal Aviation Administration (FAA) inspector, and an FAA certified Airframe and Powerplant mechanic. Fuel was found in both tanks; however, the fuel selector handle was found in the "OFF" position. The CFI informed the inspector that he had turned the fuel selector handle to the "OFF" position during the evacuation. The inspector and mechanic engaged the master switch, and the electric fuel boost pump was placed in the "ON" position. It was noted that the boost pump was working, but there was no fuel pressure or fuel present in the gascolator. The FAA inspector and mechanic conducted an inspection of the fuel selector valve. The valve position was found in the middle of the left and right port openings, and the fuel valve control rod was unable to be turned manually. The fuel selector plastic handle was removed and found cracked completely through. The inspector and mechanic also found that the brass insert housed in the fuel selector handle that attaches to the fuel valve control rod was "slipping" in the plastic handle. The inspector stated that the pilots would not have been able to tell that the fuel valve was in an intermediate position in correlation to the fuel selector handle position inside the cockpit. He further indicated that there were no previous signs of cracks in the plastic fuel selector handle.