Residential Real Estate and Banking & Finance and Finances and Real Estate & Retail

Loan defaults could cost David Marsh his Geist home

August 17, 2009
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David A. Marsh, the former supermarket executive and current president of the Crystal Flash convenience store chain, could lose his 11,800-square-foot mansion on Geist Reservoir over three defaulted loans.

In separate lawsuits, Bank of America, JP Morgan Chase and Fifth Third Bank are seeking to recover more than $3.3 million Marsh borrowed for a mortgage and two other loans that offered his Fishers home as collateral. He took out the $2.4 million mortgage in 2002 with his then-wife Jodi, and took out the two other loans valued at about $900,000 in 2007.

Marsh has been trying for at least a year to sell the five-bedroom, nine-bathroom home, most recently at an asking price of $2.2 million. He last made a payment on the mortgage in March 2008, lender Bank of America alleges in a lawsuit filed earlier this year in Hamilton Superior Court.

Marsh

Marsh, 46, did not return phone messages left at his office. His home number is unlisted.

The housing market downturn hasn’t helped the grandson of the founder of Marsh Supermarkets, but his financial struggles began much earlier, in late 2005.

That’s when his wife, who was serving as the chain’s vice president of community relations, filed for divorce. Both she and David left the supermarket chain in early 2006 as the family-owned company faced financial turmoil that ultimately led to its sale to a Florida private equity firm in October 2006. (Sun Capital Partners paid $88 million in cash and assumed $237 million in debt.)

A month after the sale, David Marsh sued the company, alleging it had shorted him about $102,000 on a $2.1 million severance package. In a separate lawsuit, Jodi Marsh claimed the company had shorted her more than $720,000 in severance. She said in the filing that she went from “executive officer status” to “almost clerical status” after she filed for divorce from David.

The grocery chain fired back against Marsh. It retroactively terminated the former executive for cause, saying he used the company as a “personal checkbook” to pay for lavish trips to locales such as Africa and New Zealand, and that he pressured the CFO to cook the books.

“David Marsh had a general disregard of proper accounting procedures and business practices,” former CFO Douglas Dougherty wrote in a statement at the time. “I was constantly pressured to improperly inflate company earnings.”

Marsh denied pressuring the CFO, and said what he learned on the trips helped to differentiate the chain.

As the lawsuit dragged on, and the company refused to cover about $300,000 in David Marsh’s legal bills, the once-high-flying executive pleaded poverty.

“[He] does not have the resources to pay those amounts, and his lawyers cannot continue to represent him without receiving payment,” his attorneys wrote in a 2007 filing. “The company’s refusal to pay Mr. Marsh’s attorney’s fees and costs as incurred has crippled his defense.”

A few days later, both sides agreed to a settlement. The chain also settled with Jodi Marsh. Neither side would reveal details of the deals.

David’s father, former Marsh CEO Don Marsh, now is fighting his own bitter legal battle with the supermarket chain. The company alleges Don used the company to bankroll extravagant trips, maintain vacation homes and hide personal relationships with female employees. He has called the accusations “false and flagrant” in court filings.

David and Jodi Marsh built their home on 1-1/2 acres at Geist in 1999, when both were earning large salaries at Marsh. In 2005, she earned $163,000, and he made $480,000.

But the divorce and lawsuit with his former employer of 25 years took a toll on David Marsh’s finances. As part of the divorce settlement, David Marsh was ordered to buy Jodi a $435,000 home, court records show.

It hasn’t helped that few buyers are in the market for such extravagant homes; the Indianapolis area has a several-year supply of houses over $1 million.

“The high-end market is just saturated with houses and there aren’t any buyers out there,” said Jeff Kucic, a residential broker with Keller Williams Realty who is listing the home.•

 

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