Don Marsh continued to use the company jet for personal reasons even after Marsh Supermarkets Inc. adopted a code of conduct to discourage financial fraud within the company, a lawyer for the supermarket chain alleged Wednesday morning in an Indianapolis courtroom.
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 in his civil trial 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 David Herzog, Marsh Supermarkets’ lawyer, 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.
Locally based Marsh Supermarkets is suing its former CEO, alleging that he used company funds to pay more than $3 million in personal expenses from at least the late 1980s until after the company was acquired in 2006.
Early Wednesday, Herzog continued to present exhibits to illustrate to the jury Don Marsh’s lavish spending habits in his efforts to paint Marsh 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.
The IBJ is a sister publication of Indiana Lawyer.