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Witnesses: Don Marsh’s expenses never questioned

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Lawyers for Don Marsh continue to hammer home their claims that the former supermarket CEO's expenses for lavish travel were widely accepted as normal business costs.

Defense witnesses Mark Varner and Steve May, two top-level accounting executives who worked at Marsh Supermarkets Inc., both testified Thursday in federal court in Indianapolis that company directors and other executives knew about its executive vouchers program.

The so-called e-voucher system has been closely scrutinized by lawyers of Marsh Supermarkets, which is suing Don Marsh in an attempt to recover more than $3 million in company funds it says the former CEO spent on travel, gifts and meals.

May, who served as Marsh Supermarkets’ director of internal controls from January 2003 to December 2006 — about the time Florida-based Sun Capital Partners bought the company — said he learned of the e-voucher system from then-CFO Doug Elbin.

Although May recounted that Elbin described it as a “secret accounts system,” Elbin also said it shouldn’t be a “huge concern” to May because the corporate controller knew about it.

Varner was Marsh Supermarkets’ corporate controller from 1991 until he retired in 2007 after a 36-year career at the company. Varner told jurors he actually reported to Elbin and Doug Dougherty, another CFO, during Varner’s tenure.

When one of Don Marsh’s lawyers, Jonathan Mays, asked Varner whether he was aware of the e-voucher system, he replied: “absolutely, yes.”

Varner said he first became aware of the system in the late 1970s or early 1980s. Much of Don Marsh’s defense rests on his assertions that he submitted his business expenses for reimbursement within the system for many years while paying personal expenses out of his own pocket.

Lawyers for Marsh Supermarkets maintain he used it as an accounting maneuver to hide his lavish spending.

The invoices “demanded some confidentiality,” Varner said, because the expenses might contain business secrets not to be seen by general accounting clerks.

Instead, Karen Workman, Marsh’s director of accounting until 2008, handled most of the invoices, Varner said. She testified Wednesday that higher-ranking company executives approved the expenses.

Varner said that as many as 35 to 40 company directors and executives might have had their expenses paid through the e-voucher system to ensure that confidentiality.

Varner told jurors he provided e-voucher documentation to outside auditors, who, “not to my knowledge,” ever questioned the expenses.

Charles R. Clark, a Muncie attorney and former Marsh board member who approved some of Don Marsh’s expense reports, testified that he also relied on the company’s auditors to voice concerns about expenses.

“I didn’t hear anything, so I didn’t react,” he said, when asked on cross-examination whether he drew any conclusions from a lack of auditor concerns.

Scott Sorensen, a former senior manager at Ernst & Young LLP, Marsh Supermarkets’ auditor at the time, testified Wednesday during cross-examination that it’s not an auditor’s responsibility to detect fraud.

Varner further told jurors that he was involved in due diligence activities leading up to Marsh Supermarkets’ sale in September 2006 to Sun Capital. During the process, he provided the private-equity firm with “volumes” of reports detailing Don Marsh’s travel and entertainment expenses.

He testified that Sun Capital never raised concerns about Marsh’s treating his travel costs as business expenses.

May later told jurors that, as the sale of Sun Capital approached, he was tasked by Dougherty to summarize in a report the contents of e-voucher documents for the fiscal years 2005 and 2006.

May presented his findings to Marsh Supermarkets' audit committee, in which he said the firm's internal financial control system showed “significant deficiencies.”

He described the system to jurors as “average” to “below average.” He maintained that the company’s CFO is charged with establishing internal controls.

On cross-examination, however, he admitted that Don Marsh and his son David Marsh, the company’s former president and chief operating officer, also shared in the responsibility.

“Between the CEO and the CFO, you would expect the CEO to contribute more to the tone at the top of the company,” Ryan Hurley, a lawyer for Marsh Supermarkets, asked May during cross examination.

“Yes,” replied May.

The defense expects to rest its case Thursday afternoon, which would leave closing arguments and jury instructions for Friday morning. The jury could get the case as soon as mid-morning Friday.

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  1. I work with some older lawyers in the 70s, 80s, and they are sharp as tacks compared to the foggy minded, undisciplined, inexperienced, listless & aimless "youths" being churned out by the diploma mill law schools by the tens of thousands. A client is generally lucky to land a lawyer who has decided to stay in practice a long time. Young people shouldn't kid themselves. Experience is golden especially in something like law. When you start out as a new lawyer you are about as powerful as a babe in the cradle. Whereas the silver halo of age usually crowns someone who can strike like thunder.

  2. YES I WENT THROUGH THIS BEFORE IN A DIFFERENT SITUATION WITH MY YOUNGEST SON PEOPLE NEED TO LEAVE US ALONE WITH DCS IF WE ARE NOT HURTING OR NEGLECT OUR CHILDREN WHY ARE THEY EVEN CALLED OUT AND THE PEOPLE MAKING FALSE REPORTS NEED TO GO TO JAIL AND HAVE A CLASS D FELONY ON THERE RECORD TO SEE HOW IT FEELS. I WENT THREW ALOT WHEN HE WAS TAKEN WHAT ELSE DOES THESE SCHOOL WANT ME TO SERVE 25 YEARS TO LIFE ON LIES THERE TELLING OR EVEN LE SAME THING LIED TO THE COUNTY PROSECUTOR JUST SO I WOULD GET ARRESTED AND GET TIME HE THOUGHT AND IT TURNED OUT I DID WHAT I HAD TO DO NOT PROUD OF WHAT HAPPEN AND SHOULD KNOW ABOUT SEEKING MEDICAL ATTENTION FOR MY CHILD I AM DISABLED AND SICK OF GETTING TREATED BADLY HOW WOULD THEY LIKE IT IF I CALLED APS ON THEM FOR A CHANGE THEN THEY CAN COME AND ARREST THEM RIGHT OUT OF THE SCHOOL. NOW WE ARE HOMELESS AND THE CHILDREN ARE STAYING WITH A RELATIVE AND GUARDIAN AND THE SCHOOL WON'T LET THEM GO TO SCHOOL THERE BUT WANT THEM TO GO TO SCHOOL WHERE BULLYING IS ALLOWED REAL SMART THINKING ON A SCHOOL STAFF.

  3. Family court judges never fail to surprise me with their irrational thinking. First of all any man who abuses his wife is not fit to be a parent. A man who can't control his anger should not be allowed around his child unsupervised period. Just because he's never been convicted of abusing his child doesn't mean he won't and maybe he hasn't but a man that has such poor judgement and control is not fit to parent without oversight - only a moron would think otherwise. Secondly, why should the mother have to pay? He's the one who made the poor decisions to abuse and he should be the one to pay the price - monetarily and otherwise. Yes it's sad that the little girl may be deprived of her father, but really what kind of father is he - the one that abuses her mother the one that can't even step up and do what's necessary on his own instead the abused mother is to pay for him???? What is this Judge thinking? Another example of how this world rewards bad behavior and punishes those who do right. Way to go Judge - NOT.

  4. Right on. Legalize it. We can take billions away from the drug cartels and help reduce violence in central America and more unwanted illegal immigration all in one fell swoop. cut taxes on the savings from needless incarcerations. On and stop eroding our fourth amendment freedom or whatever's left of it.

  5. "...a switch from crop production to hog production "does not constitute a significant change."??? REALLY?!?! Any judge that cannot see a significant difference between a plant and an animal needs to find another line of work.

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