Chapter 5 - My father’s company
Mercer Building Supply was not a glamorous empire.
It sold:
Commercial doors.
Cabinet hardware.
Fasteners.
Architectural fixtures.
Contractor supplies.
Six locations across Ohio and western Pennsylvania.
Annual revenue:
About $42 million.
Margins thin.
Employees:
My father had started with one warehouse and a borrowed truck.
When he died, the ownership structure became:
Mercer Family Trust: 58% voting interest.
Barbara Mercer: 12%.
Two longtime managers: 18% combined.
Employee ownership pool: 12%.
The trust benefited:
Me.
And eventually Noah under staged inheritance provisions.
I did not own 58% personally.
I could not fire people.
I could not write checks.
Everett, as trustee, exercised voting rights subject fiduciary duties.
A board managed company.
Lucas joined as finance and operations director three years after Dad’s diagnosis and two years after his death? Need timeline. Let's establish Dad died five years ago, Lucas joined three years ago.
Why?
He had been financial controller at an auto-parts distributor.
Mercer needed someone.
I suggested him.
Everett objected initially.
“Family employment creates conflicts.”
I said:
“Lucas is family.”
Everett replied:
“Exactly.”
We hired him anyway after independent interview.
Salary:
$162,000.
Bonus target:
20%.
Benefits.
Then Hargrove Project Services.
Lucas had formed it before joining Mercer for occasional warehouse-layout consulting.
The board disclosed it.
Policy:
Any related-party work had to be:
Preapproved.
Priced reasonably.
Documented.
Lucas could not approve his own invoices.
At least in theory.
Then company delegated signing authority.
Lucas could approve ordinary vendor payments up to:
$25,000.
Anything related-party required CFO or CEO countersignature.
Anything above $50,000 required two authorized officers.
Then the $120,000 advance.
Everett would not tell me details casually.
He said:
“Outside counsel and the audit committee need to investigate before we characterize it.”
I was beneficiary.
Not investigator.
That frustrated me.
Then he explained enough.
Mercer’s bank records showed a $120,000 transfer nine months earlier to Hargrove Project Services.
Memo:
Temporary project advance / repay 12 months
Supporting note existed.
Interest:
6.25%.
Maturity:
Twelve months.
Borrower:
Hargrove Project Services LLC.
Company approval signature:
Lucas Hargrove.
Borrower signature:
Lucas Hargrove.
Same man.
Where was second approval?
That was the problem.
A second signature appeared on an internal approval cover sheet:
J. Benton
Chief operating officer James Benton.
James said:
“I approved consulting invoices. I did not approve a loan.”
Signature image looked genuine.
Maybe attached to wrong cover sheet?
No conclusions yet.
Then Everett said:
“Do not assume forgery.”
“What else?”
“Document assembly error. Misapplied electronic approval. Unauthorized reuse. We determine.”
Then:
“Did Lucas tell you?”
“No.”
“Did he tell Barbara?”
“No.”
“Did he disclose to board?”
The quarterly related-party report did not list it.
There.
That was why Everett had been coming Monday.
The company’s bank-reconciliation software flagged the note because maturity approached and no interest payments had posted.
Not because Mom magically knew.
Everett and outside counsel had already been reviewing.
Then Mom learned Friday because she was a director? She wasn't board? Barbara has 12% and maybe board observer. Let's set she served one board seat due direct 12% ownership. She was briefed under confidentiality.
Why did she call Everett Saturday?
Because she saw the $120,000 listed as marital debt in the papers Lucas threw.
That told her the company issue had crossed into my divorce.
Then I asked:
“Why was Lucas afraid of Everett’s knock?”
Mom answered:
“Because your father used to make Everett knock like that when someone tried to avoid a meeting.”
I almost laughed.
“Three knocks?”
May you like
“Your father said one sounded polite.”
For the first time in a week, something about Dad did not hurt.
