Francis Merrigan was the owner of a importing and exporting business that was stationed in the same building as Dr. Charles Kroger's psychological clinic. However, the importing and exporting business was actually a cover for his true job: He was a drug trafficker who was smuggling drugs inside of disguised containers.
One night on 2006, Teresa Mueller, a cleaning maid, was cleaning his office as usual, and accidentally smashed one of the Turkish figurines and sucked up the Heroin inside of it. Merrigan returned to the office shortly after she left and discovered the smashed figurine, and realized what happened. He then stopped Mueller from vaccuming as she was vaccuming Kroger's office, took out the vaccum bag and got back the heroin. He also killed Mueller shortly thereafter, as she witnessed too much for him to allow her to live. He also ransacked the office in order to make it seem as though she was killed by a patient of Kroger's who went berserk and wanted to look at a file.
This incident caused Kroger to resign from his job and close his office, because of the possibility that it was one of his patients who murdered her. Monk later investigated the crime scene and noticed that there were vaccum tracks on the carpet, which indicated that the killer actually walked in on her and not the other way around. After learning from Monk that he doubts that it was one of Kroger's patients, he then stole one of the rocks from the courtyard (he was the only person in the building besides Dr. Kroger who was allowed to access the courtyard after closing hours) and then threw the same rock at Dr. Kroger's residence into a window and drove off, in order to keep the Police on the wrong trail.
Unfortunately for him, Monk recognized the rock, and remembered where it came from when attending his first session with his new psychologist. He then led Kroger over to the courtyard and showed him the exact spot in the courtyard that it came from. Merrigan then held Monk and Kroger hostage, although not before Monk deduced from his office his true job (He earlier claimed that he was using milk for a coffeemaker, but the office lacks a coffeemaker, and powdered milk makes lactose which is used in cutting heroin) and his involvement in Mueller's death. He then placed them in the back of his box rental truck, tied up on chairs. Unbeknownst to him, Harold Krenshaw was tailing him and telling the Police where he is heading. He is later arrested along with his partner, although not before getting into a firefight with Krenshaw as well as wounding Krenshaw after he took a bullet for Kroger.