UPDATE: Jet trips during affairs were also for business, Marsh testifies

Don Marsh told jurors Tuesday that he’s not proud of his extramarital affairs, but he insisted the private jet trips he took to visit his mistresses were business-related.

Lawyers for Marsh Supermarkets Inc. called the former CEO of the grocery chain as their first witness in a civil suit in Indianapolis accusing him of raiding company coffers for his own personal use.

Locally based Marsh Supermarkets 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.

The 75-year-old Marsh, dressed in a dark suit, looked directly at jurors when answering many of the accusations lobbed at him by David Herzog, the lead attorney representing Marsh Supermarkets.

Herzog presented dozens of exhibits Tuesday to illustrate to the jury Don Marsh’s lavish spending habits. He painted Marsh as a globe-trotting executive with little regard for tracking expenses as he and employees traveled on the company jet to destinations such as Chicago, Washington, D.C., North Carolina, the Dominican Republic, Cuba and Venezuela.
During the daylong grilling, Don Marsh contended that every trip had a tie to the grocery business, even when he invited company pilots and secretaries along to expensive dinners.

“Mr. Marsh, did there ever come a time when you said, ‘I’m the CEO of this company, maybe I shouldn’t be spending the shareholders’ money like this,’” Herzog asked Marsh.
“I evaluated everything I did,” Marsh responded.

The attorney and the former executive sparred at times, and Judge Sarah Evans Barker reminded Marsh to respond to the questions after Herzog complained that the witness needed to answer with more than just a “glancing blow.”

“I apologize Your Honor, but I’ve got a lot to go through,” Herzog said to the judge. “If the witness won’t answer my questions, I’m never going to get done.”

Herzog grilled Marsh on his use of the company jet for what Marsh Supermarkets claims were personal purposes as much as business.

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

Marsh admitted that he flew to visit a high school friend in Tennessee—once flying her to Indianapolis to attend the Indianapolis 500—and also for trysts in New York City to visit the director of a Russian ice ballet tour.

“You put her up in an apartment in New York City with cable television and the Playboy Channel,” Herzog said.

“I didn’t know about that,” Marsh responded, referring to the Playboy Channel.

Don Marsh wanted the company to sponsor the ice ballet tour in the United States as he began an affair with the director, Herzog alleged. Though the tour never occurred, Marsh also flew the director to his Aspen condominium during their two-year affair.

Marsh continued testifying throughout Tuesday, at one point telling jurors that in hindsight he would have tried to do “a little better job” tracking receipts that he turned into his former company for reimbursement.

“I thought I did a pretty good job,” he said. “We’re one of the most prestigious chains in the United States. We didn’t get there by happenstance.”

Making matters worse for the company, Herzog alleged that Marsh received a daily per diem when traveling on top of the reimbursements he sought for what Marsh Supermarkets considers to be personal expenses. In essence, the practice amounted to “double-dipping,” Herzog said.

Herzog is expected to continue questioning Marsh on Wednesday before Marsh’s lawyers begin cross-examining him.

Herzog also grilled Marsh over plane trips his son David Marsh and his family took to Africa and New Zealand. David worked under his father as president.

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 must repay more than $750,000. The parties reached a confidential settlement in 2007.

Don Marsh admitted that he should not have logged a few of his personal trips as business expenses, but grumbled to Herzog: “I can’t tell you everything I did every minute for 35 years. I mean, come on.”

Marsh’s father, Ermal Marsh, founded the company in the 1930s and took it public in 1953 before he died in a plane crash in 1959. Don Marsh was appointed as a director the following year and became the company’s president in 1968, before he turned 30. He was named CEO in 1980.

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

Two convictions for driving under the influence in the early 1990s led him to hire a personal driver that he ultimately used until he left the company in 2006. The driver’s annual salary of between $90,000 and $100,000, which Marsh allegedly charged to the company, also came under fire from Herzog.

But Marsh insisted that the driver's duties also involved serving as the family's personal bodyguard.

“Our lives had been threatened, but I won’t go into that,” Marsh said. “That’s classified.”

Throughout Herzog’s questioning, Don Marsh insisted most expenses were legitimate costs of doing business and that he paid for his expenses by printing a “P” for personal on the company credit card statement.

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 the trends in food retailing.

His attorneys aim to persuade the jury it’s the company that did 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.

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