During his testimony in Indianapolis Federal Court on Wednesday, former CEO Don Marsh admitted that he fired the company’s chief financial officer in 2005 after the CFO told the board and Marsh that the company needed to curtail spending to stay competitive with other grocery chains.
At the time of the alleged fraud by Don Marsh, Marsh Supermarkets was a publicly held company. It is now privately held by Sun Capital, which purchased Marsh Supermarkets in 2006 and terminated Don Marsh.
Marsh has a countersuit against the company for $2 million in severance pay he alleges was withheld from him.
The company’s board also passed a code of conduct for officers and directors in 2000 that Marsh claimed he was unaware of until questioned by the attorney David Herzog, representing Marsh Supermarkets, on Wednesday.
According to Indianapolis Star reporter Jeff Swiatek, Marsh said, “I wasn’t under the code.” The code of conduct may be pivotal to the case as in the code it stated the CEO and all company officers were under it.
Some of the expenses run up by Marsh and paid for by the company included an annual salmon fishing trip for company executives worth about $90,000, $14,178 in credit card expenses billed by one of the company’s corporate pilots during one month in 2005, a tour of China that Marsh and his wife took, an eight-day trip to Tahiti in 2004 that son David and his family took at company expense, and $739 for two sets of cufflinks from Neiman Marcus.
Marsh also admitted to a fourth extramarital affair that involved spending company money. He approved a $100,000 severance fee from the company to the former company officer he had sexual relations with.
Don Marsh’s attorney Andrew McNeil had about an hour to cross examine him before Federal Judge Sarah Evan Barker recessed the court for the day. Marsh owns property on Lake Wawasee, was instrumental in the building of Arthur’s Fresh Foods in Syracuse, which was closed after the sale of Marsh Supermarkets to Sun Capital. The company has a grocery store in Warsaw as well.