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David Marsh defends trips he took at company's expense

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Don Marsh's son David, who served under his father as president of Marsh Supermarkets Inc, traveled widely, often on the company jet, just as his father did.

And like his dad, David Marsh defended most of those travels around the United States—and to such far-reaching locations at Cambodia, South Africa, Tahiti and Vietnam—as essential to the business of Marsh Supermarkets.

“Every time I used [the plane] I had a time constraint, and my time was valuable to the company,” David told jurors late Tuesday afternoon.

Called as a witness for Marsh Supermarkets, David Marsh testified for about an hour in the civil trial of Don Marsh before Judge Sarah Evans Barker ended proceedings for the day.

But not before she scolded him for elusive answers. He often responded that “it’s not my area of responsibility” when pressed on various matters by Marsh Supermarkets lawyer David Herzog.

“You’re a smart man,” Barker told him. “You can hear.”

David Marsh is expected to be the final witness called by Marsh Supermarkets in its suit against his father. The locally based supermarket chain is seeking to recoup more than $3 million in what it alleges are personal expenses Don charged to the company.

David Marsh served as president and chief operating officer of Marsh Supermarkets from 2002 until February 2006, about seven months before Florida-based Sun Capital Partners bought the company.

While working for the grocery chain, David Marsh traveled the globe, sometimes with his wife and children, to attend organizational meetings or business outings that Marsh Supermarkets claims had no benefit to the company.

He also had Marsh Supermarkets pick up the tab for a lease on a new BMW and $25,500 in financial planning services because he believed his contract with the company allowed for it.

“It’s an open-ended clause,” David Marsh said after pointing out a section in his contract that he thinks entitled him to the perks.

David Marsh said he and his father often discussed business while on hunting and fishing trips to Alaska and South Dakota. When Herzog asked why they didn't instead go to an Arby's across the street from company headquarters, David said, "It’s not the same as getting out of town.".

Marsh Supermarkets launched a legal fight against David in 2006 after he sued the company, alleging it shorted him $102,000 on his $2.1 million severance package. The company shot back that he had used the company “as his personal checkbook,” submitting expenses from family trips, and should have to repay more than $750,000. The parties reached a confidential settlement in 2007.

In earlier testimony Tuesday, jurors heard from Patrick Calhoun, a former IRS special agent hired by Marsh Supermarkets to investigate Don Marsh's expenses. His job was to identify business and non-business expenses from 1999 to 2006, to determine whether they were "ordinary and necessary."

Cahoun found more than $3.3 million in expenses he said had no benefit to the company.

Here’s a sample:

—$927,210 for “nondeductible outings” that included taxidermy services and hunting licenses.

—$397,616 for professional organization costs that included trips to Young Presidents’ Organization and World Presidents’ Organization meetings.
 
—$625,776 for Marsh family travel expenses .

—$159,169 for “cultural” expenses that included hotel charges for Nadia Kovarskaya, the head of a Russian ice ballet with whom Don Marsh had an affair.

—$315,415 in estate planning services.

—$120,640 in nondeductible credit card expenses that included the purchase of several pairs of boots at an Alaskan boot store.

—$135,468 in “other” nondeductible expenses, such as gifts for weddings.

—$64,871 in daily per-diem charges that Marsh Supermarkets says Don Marsh collected while also billing expenses to the company.

—$21,500 for cash advances Don Marsh took to spend on trips to such places as Cuba, where credit cards aren’t accepted.

The trial is expected to conclude Friday.




 


 




 

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  • Sox Compliance
    Just saying, this is why our gov't put Sarbanes Oxley in place, so executives can't play the 'dumb' game....."but ahh...duh, i didn't know". May not apply, but just saying...obviously these crooks are playing dumb. and if you really didn't know then you had no business running the company.
  • Put the President aside as this is about the Marsh boys.
    Besides, the President does do real working vacations and if you will check back-he takes far less trips than previous presidents have. I often hope that he can have a resting vacation, which is impossisble with his job.
  • Can't wait for the Jury Verdict
    Don Marsh has replaced a deer as the must read daily story in the local press. I think the jury will not be impressed with his extraordinary "business" expenses for himself, his family and his 5 (and counting) mistresses
  • Wrong Again
    Stealing is stealing Mr. Bloomington and I personally do not think 3 million dollars is minor compared to anything. Lets not condone any poor behavior from buisness owners, politicians, athletes, etc. Teach your kids the right way and maybe this sense of entitlement will end. I did not vote for Obama and I hated his laundry list of stuff he blamed the republicans on last night but the guy certainly works hard and my guess is if he does get a vacation it is a working vacation like you, and very few I am guessing, have never experienced.
  • President Obama
    I think we should have this guy review Obama's last few vacations or his trips to camp david, It would be interesting to see how much he has spent, What Don Marsh has done is minor compared to what the politicians get by with everyday. I say make them work for it
    • Just the facts
      Gary, I am not sure you realize that after Sun purchased Marsh they had an employment agreement with old Donnie. Don continued to use the company as his personal ATM, problem is he no longer owned the business. If you had an employee that was putting bogus charges through thier expense report that person would be fired, right? You would not pay him any additional money owed and you would likely try to get back the money he had stolen. That is what Sun is doing here. This whole re-hash of all things Marsh makes me think back to the cheesy commercials Donnie used to make with the likes of Larry Bird and others. That little troll standing next to Larry Legend still makes me laugh. Donnie always wanted to be something he was not.
    • Not True Gary
      This type of wasteful spending does not go on in every business. Normally, the Board of Directors and the Audit Committee of the Board exhibit more control over the executives of the company. Marsh Supermarkets was unable to pay vendors in a timely manner, yet Don and David appear to have used the company jet for their personal vacation trips, and the list of IRS disapproved expenses validates that most of the trips taken by both Don and David were nothing more than junkets aimed at milking the tit of the cash cow they felt owed them everything. When the IRS disapproves an expense item the company or individual is afforded the opportunity to justify the expense, in this case as a legitimate business expense. I find it hard to accept that both men did not know exactly what they were doing, and in this case, Sun Capital Partners might have been hood-winked, just a little, by the Marsh Boys.
    • Complicit and SOX
      Unfortunately Don and his son treated it like a private company and further if the company was even private it's accountant SHOULD NOT deducted the expenses. The BOD AND THE OUTSIDE ACCOUNTANTS WERE AWARE OF THE COMPANY's JET THAT SAID BASIC AND INCIDENT A DEDUCTION ARE THE SUBSTANTIATION UNDER IRC 162(a). We're not talking about normal T and E for a coach or even 1st Class Seat on a commercial airliner. The BOD and CFO AND OUTSIDE ACCOUNTANT must have turned a blind eye to this in your face financial defalcation.
    • d
      d
    • Best of Luck
      Although most of the charges do seem to be out of line,this type of thing happens in every business. THisnk of all the positives the Marsh family did for many years, all the people they employed, suppliers, etc. Just think if the leaders of Congress, the Senate, and most of all our President were scrutinized for all their travel and expenses and their expenses were paid not from money they earned, but from the tax payers that included Don Marsh. Sun purchased Marsh like a used car, "as is" and buyers remorse does not apply. Pay the men the money you agreed to Sun. I wonder how the Sun executives would lik an equal drilling on all their charged expenses.My guess is, they would back off.

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