1. Introduction: A Story Every Business Owner Needs to Hear
Embezzlement is more common than most business owners realize—and more devastating than they ever expect. According to the Association of Certified Fraud Examiners (ACFE), businesses lose an estimated 5% of their revenue annually to fraud, with the average case of occupational fraud costing $1.5 million. Even more alarming, small businesses—those with fewer than 100 employees—experience the highest losses, often due to limited internal controls.
For many business owners, fraud feels like something that happens to other companies—until it happens to them.
Kevin Perry, the President and COO of Joseph Merritt & Company, knows this reality firsthand. When he took over leadership of his family’s 115-year-old business, he quickly uncovered a shocking truth: a trusted 30-year employee had been embezzling money for years, siphoning away more than $1.2 million from the company.
What followed was a grueling forensic investigation, FBI involvement, and a fight for the survival of the business.
I recently had Kevin as a guest on my Get ONPOINT! Business Podcast where he reveals his story publicly for the first time. It’s a fascinating story of warning, resilience and perseverance with many important lessons for any business owner. There was so much interest and recognition from other business owners who have had similar experiences I decided to make this the topic of my next newsletter. In this edition of the Get ONPOINT! Newsletter, Kevin shares his incredible journey of uncovering fraud, navigating its fallout, and rebuilding trust and financial stability. He also offers practical lessons for business owners—warning signs to watch for, financial controls to put in place, and steps to take if you suspect fraud within your own company.
This is a story of betrayal, resilience, and recovery—one that every business owner needs to hear.
2. The Unexpected Challenge: A Family Business in Crisis
When Kevin Perry stepped into Joseph Merritt & Co., he wasn’t just taking on a leadership role—he was stepping into the legacy of a 115-year-old family business. Like many second-generation business leaders, he expected challenges: navigating industry shifts, managing operations, and keeping the company competitive. What he didn’t anticipate was uncovering a financial nightmare that threatened the entire business.
Kevin hadn’t always been involved in the family business. His career had taken him around the world—from Japan to corporate roles in global sales and marketing—before he made the decision to join Joseph Merritt & Co. at the age of 45. Drawn by the opportunity to take ownership of something tangible and apply his leadership experience, he jumped in, ready to make an impact.
But within months of taking the helm, warning signs emerged.
A Company Facing Financial Strain
Like many small businesses, cash flow was tight. Debt was present, but not out of the ordinary. Employees and customers spoke positively about the company, and on the surface, everything seemed relatively stable. But as Kevin started digging deeper, inconsistencies in financials and subtle but unusual purchasing patterns caught his attention.
Determined to understand the business from all angles, Kevin took a methodical approach:
- He spoke with 30 to 50 customers to understand their experiences and purchasing behavior.
- He had one-on-one conversations with every employee, from the receptionist to senior leadership, gaining insights into the company culture and operational dynamics.
- He reached out to suppliers, knowing that external vendors often have a unique perspective on a company’s financial health.
Through these conversations, Kevin began to see discrepancies—certain transactions didn’t align, patterns seemed off, and customer purchasing behavior didn’t match internal records. Something wasn’t adding up.
A Shocking Discovery Waiting to Unfold
What Kevin didn’t know at the time was that a trusted 30-year employee had been quietly embezzling money for years, siphoning off over $1.2 million from the company. The warning signs were there—but like most fraud cases, it was happening right under everyone’s nose, hidden in plain sight.
The realization that someone so deeply embedded in the company, almost like family, could commit such a betrayal was hard to accept. But as Kevin would soon find out, this was just the beginning of a grueling process to uncover the full extent of the fraud and fight for the survival of the company.
3. The Discovery: How a Trusted Employee Stole $1.2M
For business owners, trust is a foundational element of success. They rely on long-term employees, believing their loyalty and commitment will help strengthen the company. But what happens when that trust is misplaced?
Seven months into his leadership at Joseph Merritt & Co., Kevin Perry uncovered one of the biggest shocks of his career—a 30-year employee had been systematically embezzling funds, ultimately stealing over $1.2 million from the company. The discovery wasn’t immediate. It was the result of digging deeper, noticing small inconsistencies, and questioning the patterns that didn’t make sense.
Uncovering the Fraud
Kevin’s first steps in leading the company involved understanding its operations, employees, customers, and suppliers. This deep dive set off red flags when he noticed irregularities in customer purchasing patterns. Something wasn’t lining up between the sales data and actual revenue.
The more he investigated, the more he realized that the issue wasn’t a simple accounting error—it was something much worse. His instinct was confirmed when he discovered that a long-time employee had been manipulating financial records, falsifying transactions, and diverting company funds for personal gain.
The scheme was sophisticated:
- The employee created fake sales orders, entering fraudulent jobs into the system.
- He altered legitimate orders using Adobe software, effectively hiding discrepancies.
- He even established a fake lockbox, rerouting checks and payments into an account that appeared to belong to Joseph Merritt & Co.—but was actually controlled by him.
When Kevin first confronted the numbers, the loss stood at $45,000—a significant amount, but not yet catastrophic. However, as he dug deeper, the fraud ballooned to $645,000 in just a matter of weeks. Ultimately, the total loss exceeded $1.2 million.
Taking the Case to the FBI
Initially, Kevin sought help from local law enforcement. But when the scale of the fraud became evident, he was advised to escalate the case. A contact from his church, a former FBI agent, told him bluntly:
“Call me when it’s over half a million dollars, and I’ll introduce you to the White-Collar Crime Division in New Haven.”
It didn’t take long.
The investigation uncovered a trail of deceit so extensive that it led to a full federal case. The employee was charged, convicted, and sentenced to 44 months in prison—though, as Kevin noted, white-collar criminals rarely serve their full sentences.
The Personal and Business Fallout
The financial damage was only part of the equation. The emotional toll was just as devastating:
- Kevin’s father, who had trusted this employee for decades, was deeply betrayed.
- Employees, who had unknowingly suffered due to missing company funds, were shocked and angered.
- Kevin himself had to make painful decisions, including selling off a business division, restructuring operations, and personally using his daughter’s college savings to keep the company afloat.
Even the sentencing judge was deeply affected by the story. When Kevin explained how the fraud forced him to tap into his daughter’s college fund, the judge issued the maximum sentence, stating that the personal ramifications of the crime were just as severe as the financial ones.
Embezzlement doesn’t just steal money—it steals trust, stability, and livelihoods.
The case was closed. The fraudster was behind bars. But the fight to rebuild the company had only just begun.
4. The Fallout: Business, Personal, and Emotional Toll
Discovering the fraud was just the beginning. The real challenge was survival.
For a small business like Joseph Merritt & Co., losing over $1.2 million wasn’t just a financial setback—it was an existential threat. The embezzlement had drained resources, disrupted operations, and forced Kevin Perry into a series of difficult, and sometimes painful, decisions. The road to recovery wasn’t just about fixing the books—it was about rebuilding trust, restructuring the company, and making sure something like this could never happen again.
Financial and Operational Impact
The fraud had crippled the company’s finances, leaving Kevin with limited options. To keep the business afloat, he had to act fast and decisively.
- Selling Off a Business Division – One of the first major decisions Kevin had to make was to sell off an entire division of the company. The move was necessary to stabilize cash flow and cut losses, but it came at a steep price. A part of the company’s legacy was lost, and employees had to be let go—one of the hardest realities of the situation.
- Major Cost-Cutting and Restructuring – With the company’s survival at stake, Kevin renegotiated every lease, every contract, and every insurance policy. He also transitioned the business from a decentralized model to a centralized hub system, reducing unnecessary operational expenses and improving efficiency.
- Half a Million Dollars in Cost Reductions – Every possible cost-saving measure was taken, resulting in over $500,000 in savings, not including the funds recovered from the sale of the division.
But despite these moves, it still wasn’t enough.
The Personal Cost: Family, Trust, and Tough Sacrifices
For Kevin, this wasn’t just about balancing spreadsheets—it was about balancing the weight of responsibility that came with leading a family business.
- He had to use his daughter’s college savings to help keep the company running. It was a last-resort decision, but one that underscored just how dire the situation had become.
- His father, who had built the business over decades, was devastated. The betrayal by someone he had trusted for 30 years was deeply personal.
- Company morale suffered. Employees who had worked alongside the embezzler for years were shocked, angry, and struggling to process how this had gone unnoticed for so long.
Even the judge in the case recognized the severity of the impact. When Kevin explained in court that his daughter’s education fund was used to cover the company’s losses, the judge was furious—so much so that she issued the maximum possible sentence to the convicted fraudster.
Emotional Toll and the Battle to Rebuild
Beyond the financial strain, trust had been shattered. Kevin had to walk a fine line between protecting the remaining employees, ensuring transparency, and preventing paranoia from spreading throughout the organization.
One of the biggest challenges was not allowing this experience to turn into distrust toward everyone in the company. After uncovering such an extensive fraud scheme, it’s easy to assume everyone has something to hide. But Kevin knew he had to lead with clarity, not fear.
- He chose to over-communicate with employees, keeping them informed about the company’s recovery efforts.
- He made it clear that honesty, openness, and accountability would be core values moving forward.
- He emphasized that this was a failure of systems, not a failure of the people who had unknowingly worked alongside the fraudster.
The hardest part? Moving forward when the damage was already done.
“You don’t just wake up the next day and everything is fine,” Kevin reflected. The effects of embezzlement linger, creating long-term consequences that don’t disappear just because the person responsible is behind bars.
Even years later, the company still bears the scars—but it has also emerged stronger, leaner, and more resilient.
Kevin’s experience offers a sobering reminder to business owners everywhere: fraud isn’t just about money—it’s about people, leadership, and the ability to recover from even the worst betrayals.
But recovery is possible. And as Joseph Merritt & Co. pushed forward, Kevin was determined to turn this painful lesson into something valuable for other business owners.
5. Lessons for Business Owners: How to Protect Your Company
Fraud can happen anywhere.
It can happen in family businesses, where trust runs deep. It can happen in small businesses, where financial oversight is often limited. It can happen in large corporations, where complex operations create blind spots.
The key takeaway from Kevin Perry’s story is this: if it can happen to a 115-year-old, well-established company with a trusted leadership team, it can happen to anyone.
While no business is completely immune to fraud, there are steps you can take to significantly reduce the risk. Kevin’s experience exposed critical lessons that every business owner, executive, and leader should implement today.
Look for the Warning Signs
Embezzlers rarely steal all at once—it’s a slow and methodical process. In Kevin’s case, the fraud went undetected for years because it was happening in small, calculated increments.
Here are some of the biggest red flags to watch for:
- Employees who never take a vacation – This may seem like dedication, but in reality, fraudsters don’t want anyone else looking too closely at their work while they’re away. If an employee insists on staying connected while on vacation or avoids taking time off altogether, it could be a sign they have something to hide.
- Financial patterns that seem too consistent – If revenue, expenses, or profits appear too predictable, even in a volatile market, it might indicate someone is manipulating the books.
- Long-time employees with unchecked authority – While tenure should be valued, it shouldn’t come with unquestioned trust and unlimited access to financial systems. In Kevin’s case, the embezzler had built credibility over three decades, making it easy for him to operate without suspicion.
Implement Strong Financial Controls
Fraud happens when opportunity, motivation, and rationalization align. To prevent this, eliminate opportunity through strict financial controls:
- Separate duties in financial operations – No single person should have complete control over invoicing, payments, and financial record-keeping. Having at least two sets of eyes on every transaction can make fraud far more difficult.
- Conduct regular audits (and go back at least 5 years) – Many businesses only audit the last three years of financials, but Kevin learned the hard way that going back further could have caught the fraud sooner.
- Rotate key employees across roles – If the same person handles procurement, manages vendor relationships, and oversees accounts payable, it creates an opportunity for unchecked fraud. Rotating employees between departments can help disrupt any long-term schemes.
- Review supplier and customer accounts regularly – In Kevin’s case, he first uncovered the fraud by analyzing customer purchasing behavior. Regularly comparing expected vs. actual financial transactions is a critical step in fraud detection.
Foster a Culture of Transparency and Accountability
Fraud doesn’t just happen because someone wants to steal—it often happens because someone rationalizes that they deserve more, were overlooked for a raise, or aren’t being paid enough.
This is why company culture matters.
Kevin emphasized that businesses must create an environment where:
- Employees feel heard and valued – Disgruntled employees who feel underappreciated or passed over for promotions are more likely to justify unethical actions.
- There are clear checks and balances – Employees should know that financial processes are regularly reviewed, making fraud a high-risk, low-reward activity.
- Leadership is approachable – Employees should feel comfortable reporting suspicious activity without fear of retaliation.
If You Suspect Fraud, Take Action Immediately
If you start to notice red flags, don’t wait—start investigating. Kevin’s experience shows that fraud doesn’t fix itself, and the longer it goes unnoticed, the worse the damage will be.
Steps to take:
1. Gather evidence before making accusations – Look for clear patterns before confronting an employee or alerting law enforcement.
2. Involve external experts – Whether it’s an FBI contact, forensic accountant, or fraud investigator, outside perspectives can provide valuable insights.
3. Be prepared for tough decisions – In Kevin’s case, he had to sell off a division, cut costs, and make painful sacrifices to keep the company alive. Acting fast increases your chances of financial recovery.
It’s Not Just About Money—It’s About Trust
At the heart of every fraud case isn’t just financial loss—it’s broken trust. Employees, customers, and even family members feel betrayed. Recovering from that damage takes time, effort, and leadership.
Kevin Perry’s story is a wake-up call for business owners everywhere:
- Fraud can happen to anyone
- Financial controls are your best defense
- Trust, but verify—always
Embezzlement is more common than you think. But with the right systems and culture in place, you can protect your business, your employees, and your legacy.
6. Moving Forward: Rebuilding and Future Growth
Surviving a $1.2 million embezzlement scandal wasn’t just about recovering lost funds—it was about rebuilding a company’s foundation, restoring trust, and adapting for long-term success.
For Kevin Perry and Joseph Merritt & Co., the path forward meant turning crisis into opportunity. Rather than dwelling on the past, he focused on reinventing the business, implementing stronger financial practices, and driving innovation to ensure long-term sustainability.
Adapting the Business Model for Growth
Despite the challenges, Kevin took a strategic approach to restructuring operations—not just to recover, but to thrive in a rapidly evolving market.
Centralizing Operations – Moving from a decentralized structure to a centralized hub model helped optimize costs, streamline logistics, and improve efficiency.
Expanding into High-Growth Areas – Instead of just restoring what was lost, Kevin positioned Joseph Merritt & Co. for new opportunities in technology and digital transformation, including:
- Large-format printing and graphics for high-demand industries.
- Advanced scanning and digital document management to modernize the company’s offerings.
- 3D scanning and AI-driven building data solutions, tapping into emerging tech trends.
Enhancing Financial and Operational Controls – Beyond just recovering from the fraud, the company implemented stronger internal oversight and auditing procedures to prevent future vulnerabilities.
Leading with Resilience and a Growth Mindset
Kevin’s experience reinforced a crucial lesson in leadership: running a business isn’t about avoiding challenges—it’s about learning how to navigate them, adapt, and come out stronger.
- Tough decisions were necessary, including selling off a division and reducing costs, but those moves stabilized the business and set it up for future success.
- He approached rebuilding with transparency, ensuring employees, customers, and suppliers knew the company was moving forward with integrity.
- He embraced new technology and innovation, recognizing that stagnation wasn’t an option in a competitive market.
The Future: What’s Next for Joseph Merritt & Co.?
Looking ahead, Kevin has a clear vision for where the company is headed—and it’s not just about rebuilding what was lost, but expanding into new frontiers.
- Growth in Large-Format Printing – Increasing capabilities in wall graphics, trade show displays, and branded visuals to meet rising demand.
- Scaling 3D Scanning and AI-Driven Digital Documentation – Positioning the company at the forefront of building scanning, LiDAR technology, and AI-powered space planning.
- Modernizing Business Processes – Leveraging data-driven decision-making and automation to enhance operational efficiency and customer experience.
- Strengthening Risk Management – Ensuring financial oversight and internal controls remain a top priority to prevent future fraud risks.
Lessons for Entrepreneurs: Crisis as a Catalyst for Growth
Kevin’s story is more than just a cautionary tale about fraud—it’s a lesson in leadership, resilience, and reinvention.
- The hardest challenges often lead to the biggest opportunities.
- Smart financial oversight is not just a necessity—it’s a competitive advantage.
- Innovation and adaptability are the keys to long-term success.
The Joseph Merritt & Co. story is far from over. With a stronger foundation, a clearer vision, and a relentless focus on growth, the company is poised for its next chapter—one built not just on recovery, but on reinvention.
7. Final Thoughts: A Wake-Up Call for Every Business Owner
Embezzlement is more than just a financial crime—it’s a betrayal of trust that can shake the foundation of a business. For Kevin Perry, uncovering a $1.2 million fraud scheme wasn’t just about chasing down missing money; it was about protecting the integrity of his family’s business, making tough decisions to ensure its survival, and rebuilding for the future.
His story is a wake-up call for every business owner and entrepreneur. Fraud isn’t something that only happens to large corporations or careless companies—it can happen in any business, at any time, by people you trust the most.
Lessons Every Business Owner Should Take to Heart
Kevin’s experience reinforces key takeaways that can help other businesses avoid a similar fate:
- Fraud can happen in any business, even with the most trusted employees.
- Red flags are often subtle—pay attention to financial inconsistencies, patterns that don’t add up, and employees who resist oversight.
- Strong financial controls, regular audits, and employee rotation are essential in fraud prevention.
- When fraud happens, act swiftly, involve experts, and prepare for tough decisions.
- Resilience and smart leadership can turn even the worst crises into opportunities for reinvention.
Kevin and Joseph Merritt & Co. not only survived one of the most challenging periods in their history, but they have emerged stronger, leaner, and better prepared for the future.
A Call to Action: Assess Your Business Today
If you’re a business owner, executive, or entrepreneur, now is the time to assess your company’s financial safeguards.
- Do you have the right checks and balances in place?
- Are financial transactions being regularly reviewed by multiple people?
- Have you audited past financial records for inconsistencies?
- Is your company culture built on transparency and accountability?
Fraud is a reality no business can afford to ignore. By taking proactive steps today, you can protect your business, your employees, and your legacy from falling victim to the same kind of betrayal.
Share Your Thoughts
Have you or someone you know experienced fraud in a business? What steps do you take to prevent financial misconduct in your company? Join the conversation in the comments below—your insights could help another business owner avoid a costly mistake.
You can watch and listen to the full podcast with Kevin and other fascinating guests on my Get ONPOINT! Business Podcast YouTube channel and please make sure to subscribe so you never miss an episode. If you found this article valuable, be sure to follow the Get ONPOINT! Newsletter for more real-world business lessons, insights, and strategies.
To learn more about how ONPOINT Business Advisors, Inc. and I can help your business achieve its growth objectives, visit my website at jasonmundy.focalpointcoaching.com. I am also offering a free 20-minute exploratory coaching call to discuss your unique challenges and the opportunity of working together to overcome them. Contact me at jmundy@focalpointcoaching.com to schedule your session today.
Together, let’s build smarter, stronger, and more resilient businesses.
