Investigator testifies on examination of payments

10/6/2012

An investigator for the Lucas County Prosecutor’s Office testified in Common Pleas Court on Friday about the thousands of documents he examined and the months of investigating he conducted that resulted in criminal theft charges against a pair associated with the Tony Packo’s restaurant company.

Frank Stiles testified that he began investigating the corporate records of Tony Packo’s Inc. after one of its former owners, Robin Horvath, came to the prosecutor’s office with allegations against his cousin Tony Packo III and the company’s controller, Cathleen Dooley. He said that after a preliminary investigation that included a subpoena to the company for explanations of alleged misappropriations, he determined “that there were things we needed to look at.”

Mr. Packo, 39, and Ms. Dooley, 47 were charged in December with aggravated theft for allegedly stealing about $170,000 from the company over a four-year period. If convicted, the pair face up to three years in prison each.

Mr. Horvath, a member of the Packo family who has since lost his ownership in the company, testified for most of Friday. His testimony, which spanned three days, centered on his suspicions of the misappropriations of company funds and his decision to investigate.

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

On Friday, Mr. Horvath was questioned by attorneys for Mr. Packo and Ms. Dooley about his own personal expenses paid for by the company, including dry-cleaning bills, gasoline cards for his wife, and events held at the restaurants for members of his family. Mr. Horvath explained that he believed these were acceptable expenses and that the other shareholders received similar benefits.

He was also questioned on the investigation that he conducted in secret and the dozens of recordings he made of his interactions.

Mr. Horvath denied that he approved his cousin becoming the company’s director of restaurant operations, despite being shown a 2004 resolution that “appeared” to have his signature. He also said he was unaware of a compensation package written out for the position that included compensation for travel.

Among the allegations of theft is that Mr. Packo pocketed cash brought in through a parking lot the company leased for its downtown store near the ballpark. When questioned if he received $21,000 in cash over three years as one-third of the revenue, as his uncle Tony Packo, Jr., previously testified, Mr. Horvath said he did not.

Mr. Horvath acknowledged that he never saw a line item for parking revenue although he knew that cash was being collected and that it didn’t raise concerns in the first several years after the opening of Packo’s at the Park.

When questioned about the checks made out to either Ms. Dooley or Mr. Packo for cash that he himself signed, Mr. Horvath said he would not have signed them unless he had been given documentation or a verbal representation of what they were for.

Included in those signed by Mr. Horvath were two checks to Ms. Dooley totaling more than $80,000 for reimbursements for items she paid on her credit card when the company was experiencing problems with available cash.

Mr. Stiles said during his testimony that he reviewed multiple checks while investigating the allegations. In court, he reviewed several checks one by one connected with a personal bank loan taken out by Mr. Packo with the understanding that it would be used for company purposes.

Mr. Stiles testified that although the company was paying Mr. Packo back for the loan, not all of the reimbursement money was being paid to the bank. He determined that more than $17,000 had been paid to Mr. Packo by Tony Packo’s Inc. but there was no supporting documentation.Mr. Stiles is to return to the witness stand for additional testimony on Tuesday. Judge Frederick McDonald told the jury of seven men and five women that because of the national holiday Monday, the courthouse will be closed.

Mr. Stiles is the 20th witness to testify in the case that began with opening statements Sept. 28. It is expected to last through next week.

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