Horvath claims he uncovered significant misappropriations at Tony Packo's, Inc.

Robin Horvath testifies in the trial of Tony Packo III and Cathleen Dooley.

Going page by page through financial records for Tony Packo’s Inc., Robin Horvath outlined in Lucas County Common Pleas Court on Thursday both the “anomalies” he believed he found in the numbers and his ensuing investigation that led him to believe his cousin was stealing from the company.

Mr. Horvath, a member of the Packo family and a former shareholder in the company, testified for several hours during the criminal trial of his cousin Tony Packo III and the company’s controller, Cathleen Dooley. Each is charged with aggravated theft for allegedly stealing $170,000 from the company over a four-year period.

Mr. Horvath, who has since lost his ownership in the restaurant company, testified that he investigated the finances of the company for several months in early 2010 and believed he had uncovered significant misappropriations. He said that he decided to investigate the matter on his own before bringing his concerns to the attention of his cousin and his uncle Tony Packo, Jr., who were also onetime owners of the company.

“I felt it raised suspicions and I would have to proceed at this covertly, to investigate this,” Mr. Horvath said. “I started to go into the office at night. … I started in the accounts-payable files.”

Mr. Horvath testified that he found extensive expenditures payable to Mr. Packo that he believed did not contain adequate documentation. He said that he shared these after he acquired documentation that he believed showed “about $300,000 in misappropriated funds.”

Mr. Horvath, who is to return to the witness stand today, was questioned only briefly by Mr. Packo’s lawyer. Jerry Phillips asked Mr. Horvath about his own personal expenses that had been charged to the company, including a gift card that he kept supplied with money for his mother-in-law for use at the company’s restaurants, $3,500 he charged in dry-cleaning expenses, and a gas card used by his wife in Toledo and himself while vacationing in Florida

“Those would be nonreimbursed costs to the company?” Mr. Phillips asked.

Mr. Horvath acknowledged they were.

During his direct testimony, Mr. Horvath pointed to specific concerns he had with the numbers provided to him by Ms. Dooley and the documents he subsequently discovered.

Included were payments to a local roofer and a glass supplier for work done on Mr. Packo’s home and that of his mother. The parties eventually agreed that Mr. Packo would reimburse the company for those expenditures.

Another of Mr. Horvath’s concerns was the cost to lease a parking lot near the company’s downtown location and the fact that the profit-and-loss statements showed no money coming in.

He said he was told by Mr. Packo that the cash was split three ways among the two of them and Mr. Packo, Jr. When asked if he received cash from the parking lot, Mr. Horvath answered that he had not.

Among the allegations of theft against Mr. Packo is that he took cash from parking proceeds at the company’s ballpark location, purchased goods and charged them to the company, and took payment advances. Ms. Dooley is accused of helping to facilitate the alleged thefts.

There has not been testimony as to whether the cash brought in from the parking lot was listed on tax returns.

Mr. Packo’s attorneys declined to discuss the case, noting they were in the midst of trial.

Mr. Horvath reviewed for the jury month by month the meetings held among the company’s officers and the erosion of the family business.

Prior to criminal charges being filed, the Packo family went through a publicized civil battle in common pleas court that resulted in the appointment of a receiver to run the day-to-day operations. In February, the company was sold to TP Foods LLC.

Mr. Packo and Ms. Dooley were retained and are currently working at the company. Mr. Horvath was not and has since filed a wrongful termination and whistleblower’s lawsuit, which remains pending.

Mr. Horvath testified that talk of dissolving the partnership between himself and his relatives was first brought up by Mr. Packo in April, 2010. Mr. Horvath said his cousin told him the two could no longer work together and the company should be separated.

He received an offer from the company’s corporate attorney shortly thereafter that he described as “insultingly low.”

In June, 2010, the company was contacted by the bank about concerns about the company’s cash flow and in August, 2010, Fifth Third Bank issued a default notice on Tony Packo’s $2.7 million in debt owed, Mr. Horvath said. A receiver was put in place to run the company that same month.

When questioned by Mr. Phillips in court Thursday, Mr. Horvath said he was unsure of the number of outstanding lawsuits he has filed regarding the company. He acknowledged that his outstanding legal fees equal more than $500,000.

Mr. Horvath is one of 19 witnesses who have testified over five days during the case that has involved more than 100 exhibits. Also testifying were several current and former Tony Packo’s Inc. employees, attorneys, the company’s accountant, and Mr. Packo, Jr.

The jury of seven men and five women is to return to hear additional testimony today in the trial over which Judge Frederick McDonald is presiding.

Contact Erica Blake at: eblake@theblade.com or 419-213-2134.