IBJNews

UPDATE: Defense takes turn in Marsh civil trial

Back to TopCommentsE-mailPrintBookmark and Share

Don Marsh finally got off the hot seat Wednesday afternoon after his former company wrapped up nearly two days of questioning, but he didn't stay off the witness stand for long.

Locally based Marsh Supermarkets Inc. is suing the former CEO, alleging that he used company funds to pay more than $3 million in personal expenses from the late 1980s until after the company he led for almost four decades was acquired in 2006.

An attorney for Don Marsh began cross-examining his client for about an hour Wednesday in the civil trial before Judge Sarah Evans Barker ended proceedings for the day. Thursday will mark his third straight day on the witness stand.

The 75-year-old Marsh spent most of the day Wednesday undergoing more grilling from David Herzog, the lead attorney for the grocery chain.

Herzog ended his examination of Marsh by submitting expenses that showed the former CEO used the company jet in 2005 to take 13 family members—in two separate trips—to New York City and back to watch the Macy’s Thanksgiving Day Parade. The trips came at a time when the company board was concerned about cutting expenses while facing growing competition from other grocery chains.
 
“I didn’t see anything wrong with it,” Marsh told the jury.
 
When Herzog pressed him on how much the excursion cost the company, Marsh responded: “I have no idea.”

Earlier in the day,  Herzog got Marsh to admit to a fourth extramarital relationship that involved spending company funds. The affair involved a company officer that the executive provided with a $100,000 severance payment when she left the company.

Marsh said such payments were “not uncommon” for officers leaving the company.

Don Marsh’s attorney, Andrew McNeil, began attempting to shoot holes in Herzog’s case by maintaining that the company’s by-laws gave Marsh nearly total control of company operations.

Marsh described how he attended seminars and speaking engagements at food-industry groups “religiously” and how his networking and extensive traveling helped the company in its marketing initiatives.
 
He also served on “board after board,” which, combined with all of his other duties, usually kept him from taking his allotted vacation time, Marsh said.
 
When McNeil asked him if he ever took his four weeks of vacation, Marsh said, “not really.”

Earlier in the day, jurors learned that Marsh continued to use the company jet for personal reasons even after his company adopted a code of conduct to discourage financial fraud within the company.

Directors of Marsh Supermarkets signed off on the document in June 2004 following federal passage of the Sarbanes-Oxley Act, a high-profile law which mandates that top management of public companies certify the accuracy of financial information.

But Don Marsh told jurors that he didn’t think the code of conduct applied to him because he "wasn’t aware of it," even though his signature appears on the document.

“Where is that written?” asked Herzog, responding to Don Marsh’s assertation that he "wasn't under the code."

“It’s written from my lips,” Marsh said during his second day of testimony.

Early Wednesday, Herzog continued to present exhibits to illustrate to the jury Marsh’s lavish spending habits in his efforts to paint him as a globetrotting executive with little regard for tracking expenses.

The then-new company code of conduct, which Don Marsh certified with his signature, first appeared in a Marsh fiscal 2005 annual report.

Under oath, though, Marsh said he didn’t have time to read the entire annual report.

“It’s stacks like this every day,” Marsh said, placing his hand about a foot above the witness stand to indicate the amount of paperwork he approved on a regular basis. “It’s impossible to read all this stuff.”

“Is it a fact that you traveled so much you didn’t have time for real work?” Herzog asked Marsh.

Marsh disagreed, saying “I worked that much.”

Herzog continued to hammer away at expenses Marsh claimed as business travel, including an annual fishing junket he and employees took to Alaska. In 2004, he requested reimbursement for $22,908 spent on fishing licenses, various apparel and 22 boxes to ship fish back to Indiana, according to court documents.

In addition, Marsh racked up $19,000 in tips to wait staff.

Marsh testified that he never looked at the cost of the yearly trips to Alaska that he described as a “company program,” but guessed they likely cost the chain a total of $90,000 not counting travel expenses.

He further said he didn’t commit fraud because he didn’t deliberately mislead the company.

“I paid for personal expenses,” he said. “We may debate on how I paid it, but it was standard practice.”

Marsh typically used the company credit card and simply marked “P” next to the charges on the statement he considered personal instead of using standard expense forms.

Florida-based Sun Capital Partners, which bought Marsh Supermarkets in 2006, terminated Don Marsh’s contract “without cause” after it took over, then stopped paying his severance in 2008, after it claims it discovered personal expenses charged to the company.

Marsh was one of Indiana’s highest-profile executives for decades and frequently appeared in the company’s TV advertising.

Attorneys for Don Marsh defended the expenses, saying they were within the boundaries of his employment contract. And they say his extensive travels were justified to promote the company and stay on top of trends in food retailing.

His attorneys aim to persuade the jury that the company was the party in the wrong. After Marsh Supermarkets sued him in federal court in 2009, he countersued, asserting the company improperly halted his post-retirement payouts in 2008 and owes him more than $2 million.

The trial in federal court is expected to last two weeks.
 

ADVERTISEMENT

  • @Daniel
    You posted the best comment I've read, in regards to Marsh Supermarkets. George Bluth = Don Marsh...that is hilarious! It's also kind of true...only Don isn't funny.
  • Scum
    Don Marsh apparently thought he was above not only the law but the Code of Conduct bearing his signature.He should have watched "Arrested Development" to see what happens when executives defraud investors .Eerily similar to George Bluth.
  • better times
    Sad days for sure. Seems like the high rollers always fall sooner or later. Take a few minutes and remember when, 90's, by reading this article about CEO of the year... copy and paste to browser url... http://www.thefreelibrary.com/CEO+of+the+year%3a+all+smiles+at+Marsh.-a014833601
  • If only,
    There are family owned supermarket chains that do well and prosper, Wegman's, Meijer, Schnuks et al. They are fortunate to have leadership with ethical standards. Shame that Marsh Supermarkets lacked that.
  • Dumb Dumb Dumb
    seems like Mr Marsh is playing dumb! as a company CEO how do you lack such oversight of your company? Mr Marsh knew what he was doing, just like the majority of rich executives who abuse there power. this is what Sarbane Oxley was to prevent, playing dumb. Mr Marsh, you arent fooling anybody! as a CEO, don't sign things if you dont read them.
  • Too Much Executive Power
    Dennis Kozlowski, the greed driven CEO of Tyco, agreed to payback a portion of what he took from the company via false expense report filings, as he realized his ex-CFO would be testifying against him. Don Marsh clearly has another foe waiting in the wings. The IRS must have some interest in expenses claimed, both by Don Marsh and Marsh Supermarkets, Inc. I remain interested in the outside public accounting firm that provided auditing services to Marsh Supermarkets. In addition, I would like to see a complete review of all non-standard expense report filings of other corporate officers and members of the Board of Directors. Clearly, someone dropped the ball, and the only remedy I can see is for Don Marsh to return all funds received, and he should be required to submit amended tax returns if this trial determines that funds were removed from the company due to fraudulent expense report filings. If Don is acquitted, then the CFO and the Board of Directors need to hire a better accounting firm for future audit work.
  • john
    Don is fortunate I am not on that jury. Give every penny back plus interest. Don was "ridin durdy"(sic)!
  • Oh Don
    With all the Sarbox coverage back then, how could anyone not know it pertained to the chairman of the company? So he is saying he wasn't aware of the Dennis Kozlowski case. Don may have lost his case today. If he just stayed firm that the expenses were legitimate, he may have had a defense. But saying what he said is basically admitting guilt. I am afraid Mr. Marsh is done!

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am so impressed that the smoking ban FAILED in Kokomo! I might just move to your Awesome city!

  2. way to much breweries being built in indianapolis. its going to be saturated market, if not already. when is enough, enough??

  3. This house is a reminder of Hamilton County history. Its position near the interstate is significant to remember what Hamilton County was before the SUPERBROKERs, Navients, commercial parks, sprawling vinyl villages, and acres of concrete retail showed up. What's truly Wasteful is not reusing a structure that could still be useful. History isn't confined to parks and books.

  4. To compare Connor Prairie or the Zoo to a random old house is a big ridiculous. If it were any where near the level of significance there wouldn't be a major funding gap. Put a big billboard on I-69 funded by the tourism board for people to come visit this old house, and I doubt there would be any takers, since other than age there is no significance whatsoever. Clearly the tax payers of Fishers don't have a significant interest in this project, so PLEASE DON'T USE OUR VALUABLE MONEY. Government money is finite and needs to be utilized for the most efficient and productive purposes. This is far from that.

  5. I only tried it 2x and didn't think much of it both times. With the new apts plus a couple other of new developments on Guilford, I am surprised it didn't get more business. Plus you have a couple of subdivisions across the street from it. I hope Upland can keep it going. Good beer and food plus a neat environment and outdoor seating.

ADVERTISEMENT