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Marsh to call former CEO as first witness

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A lead lawyer for Marsh Supermarkets Inc. gave jurors a preview Monday of its claims against former CEO Don Marsh, who the company says raided corporate coffers to pay millions of dollars of personal expenses.

But, unable to describe the extent of the alleged fraud “satisfactorily,” David Herzog told jurors they would instead hear from Don Marsh himself.

They won’t have to wait long.

Herzog said he plans to call the 74-year-old Marsh as the corporation’s first witness when the civil trial reconvenes Tuesday morning in downtown Indianapolis.

“Mr. Marsh broke his contract,” Herzog said during opening arguments Monday. “He took what didn't belong to him, and he took a lot.”

The locally based grocery chain alleges that Don Marsh used company funds to pay more than $3 million in personal expenses from at least the late 1980s until new owners ousted him in 2006.

Among the examples cited in court records:

— $1,000 for two pairs of boots he gave to a hunting trip guide and the guide’s girlfriend.

— $5,960 for four Indianapolis Colts season tickets.

— Use of the corporate plane to fly to the Dominican Republic with three female employees, one of their sisters and his driver on a trip that included a $325 dinner and a $295 round of golf.

— Rent for a mistress’s New York apartment.

Attorneys for Don Marsh defend the expenses, saying they were within the boundaries of his employment contract. And they say his extensive travels were justified to promote his company and stay on top of the trends in food retailing, which helped him to build Marsh Supermarkets into a $1.5 billion company.

“He’s not perfect,” lawyer Andrew McNeil said of his client. “He was passionate and driven, while flawed, and he did his best to be open, honest and fair with the company.

McNeil, a partner at the Indianapolis-based law firm Bose McKinney & Evans LLP, acknowledged that Don Marsh had "more than one extra-marital affair" that involved company money.

“But the evidence will show it’s not fraud,” he said. “It’s not even close.”

Marsh, the son of the grocery chain's founder, was one of Indiana’s highest-profile executives for decades. He served as CEO for 38 years and frequently appeared in the company’s TV advertising.

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

“Sun’s conclusion was that it had been snookered,” said Herzog, a partner at Faegre Baker Daniels. “Mr. Marsh spent millions of dollars of the company’s money over the years for his benefit, and for his family’s, and frankly, for his buddies.”

Don Marsh’s attorneys aim to persuade the jury that it was the company that did wrong. After Marsh Supermarkets sued the ex-CEO in federal court in 2009, he countersued, asserting the company improperly halted his post-retirement payouts in 2008 and owes him about half of his $4.2 million severance.

Attorneys for the two sides have lined up dozens of witnesses and hundreds of pieces of evidence. Among those expected to testify are executives and board members of the company before its 2006 sale to Sun Capital Partners. Sun, which paid $88 million in cash and assumed $237 million debt, slashed expenses and installed a new board after the deal closed.

In all, Marsh Supermarkets is seeking $7 million—$3.4 million in improper expenses, $2 million in payments Marsh received after leaving the company, and $1.6 million for fees and reimbursement for an IRS penalty stemming from his questionable expenditures.

Judge Sarah Evans Barker recessed the first day of proceedings at about 5 p.m. The trial reconvenes at 9:30 a.m. Tuesday.
 

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  • He Controlled the CFO
    In most companies, the CEO controls the CFO. It will be interesting to see who signed, or approved, the checks that covered the expenses claimed. I recall the CEO of Tyco going to prison for embezzlement and misuse of corporate funds, and it appears that Marsh was doing a similar thing. The Financial Auditing Firm that performed audits for Marsh could be in real trouble. In the end, one thing is clear, someone was cooking the books. As for SunLife, they need to hire a better due diligence team leader.
  • Greed
    It's a pretty easy case, I myself have seen Mr Marsh out throwing money around. i remember one day when i was working he came in w/ a young lady, and a lot of drinks later things went on. company card is all i can say paid for it. guy did was most CEOs in this country do...sit back, do nothing and spend everything
  • Zero Sum Game
    Where was the Board and Audit Committee? Who was their Outside Auditors? Did any of the above raise these issues in the YEARS before sale of the stock of the company? Seem the PEEPS with a cause of action are the Former Shareholders? If Sun Capital had to pay the IRS maybe they should have BOUGHT ASSETS and NOT STOCK ...DUH! Sounds like Don was the way he was for a good part of his adult life. Also seems as though SunLife should focus on the business going forward. For them to go after Don personally it seems as though he was not honest or mislead them in other ways and they should CHANGE the store name away from the soiled Marsh name. Many of us grew up with that name. I do not think this is SMART Market Strategy! I think they both lose.
  • employee
    I hope they throw the book at him and all the former managers at Marsh.....what a bunch of crooks.

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