Ex-financial officer sued by museum

An embezzlement scandal has rocked the Fruitlands Museum, but the 94-year-old institution in Harvard is financially stable and membership is strong, officials said.

The museum has taken a series of steps to improve its bookkeeping procedures and is confident it will successfully weather the $1 million embezzlement scheme that officials allege was carried out for seven years by Peggy Kempton while she served as its deputy director and chief financial officer.

"It's very hard to come to grips with, but we are," Maud Ayson, the museum's executive director, said. "We are stronger today than we've ever been. We are so healthy and doing some exciting things."

The museum has filed a lawsuit in Worcester Superior Court against Kempton and her children, Bunker, Kristen, and Robert, all of Hollis, N.H. The suit alleges that Kempton and her children obtained credit cards in the museum's name and made personal purchases. It also alleges that Kempton used museum funds to pay for personal credit cards; violated her lease by not paying monthly rent for a museum-owned cottage; used Fruitlands funds to pay for utilities at the cottage; and diverted museum funds to her children.

The suit also alleges that Kempton concealed the financial charges and payments by falsely adjusting Fruitlands' financial books and records.

Kempton could not be reached for comment.

Kempton was hired in 1997 to perform financial duties at Fruitlands, including overseeing donors, events, vendors, and the museum store. Kempton also handled check writing, communications with Fruitlands' bank and accountant, and all tax matters, according to the suit.

She resigned abruptly in February, Ayson said.

"Within the first week in March, we began to notice financial irregularities," Ayson said.

The museum immediately hired a law firm and forensic accountant and notified the state attorney general's office, she said.

A spokesman for the attorney general's office would not comment on the case.

Over the summer, the museum hired a new chief financial officer, Tim Firment, who had previously served as treasurer of its board of trustees. The museum also brought in a bookkeeper and a certified public accountant who comes in weekly, Ayson said.

Robert Anderson, president of the Fruitlands board of trustees, said there is a silver lining. Today, he said, the museum has a much better handle on its operation.

"This whole process clarified a number of things for us," he said. "I feel we have a far better understanding of our finances, and we're safer than we were before."

Ayson said the museum had checks and balances in place and an accountant who reviewed the books.

Also named in the lawsuit is the museum's former accountant, Solar & Kilcoyne of Leominster. The suit alleges that the accountant should have noticed the financial discrepancies.

Solar & Kilcoyne prepared Fruitlands' annual balance sheets and audited the museum's financial statements, Firment said. Todd Solar, a CPA and partner at Solar & Kilcoyne, did not return a call seeking comment.

"They gave us a clean statement each year for the past 15 years," Firment said.

Firment said that Kempton had made electronic payments for credit card purchases unrelated to the museum's operations, , paid her children, and took additional salary for herself.

Firment said credit card purchases included items such as hotel stays and spa treatments.

According to the suit, Kempton's daughter, Kristen, began volunteering at museum events and auctions in 2001. Kempton started paying her daughter $10 an hour for her services, even though she was a volunteer, the lawsuit alleges.

The lawsuit also alleges Kempton's children used credit cards in Fruitlands' name for personal purchases.

In 2007, Kempton allegedly diverted $18,598.59 from a museum account to Bunker Kempton for 1,800 hours of work, and $10,522.50 to Kristen Kempton for 1,000 hours of work.

By 2007, Kempton was making an annual salary of $67,000. The suit alleges that she withdrew additional money in excess of her base salary totaling more than $40,000.

The nonprofit museum has an annual budget of $1.2 million, but the alleged thefts were spread out over several years and did not have a severe impact on its finances, Firment said.

"It hindered our ability to spend as much as we'd like to spend," Firment said, while adding, "financially, going forward, we're strong."

The Fruitlands Museum was founded in 1914 by Clara Endicott Sears. Its exhibitions focus on the region's rich intellectual and artistic history; the facility also hosts lectures, concerts and private events.

Jennifer Fenn Lefferts can be reached at jflefferts@yahoo.com.