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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 have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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