This past summer, he learned--through the police--that one of his security camera customers was a Catholic priest in Sherwood, Oregon, who installed the $295 camera he purchased from SpyGuy in a church restroom to spy on patrons of the diocese where he worked.
Imagine how he felt and the potential implications to his company. He'd spent the past six years building an enviable business, even earning acknowledgement in the press as a successful one-person venture producing $1 million or more.
As he contemplated the possibilities, Walton tried to imagine the horrible headlines that could possibly happen. The worst: "Catholic Priest Installed Hidden Camera In Boys Bathroom Of Church."
Some say all press is good press, but this would definitely not be good for his business.
So here's what Walton did, which can serve as a best practice case study for any entrepreneur in a similar position:
1. Study up
When the story broke, Walton was in the midst of reading "Trust Me, I'm Lying: Confessions of a Media Manipulator" by Ryan Holiday, who wrote the book in 2012 as an expose on the modern journalism system.
In a nutshell, Holiday scammed the media system by responding to editors' requests--scores of them--with false stories that amazingly "bit," garnering him press coverage for stories and claims the reporters didn't fact check, as a scam on us all.
As Walton read, he was struck by the way media stories can spin out of control. So he determined to do what he could to wield a little control of his own.
2. Prepare ahead for the questions you are likely to hear from the press
There's an exercise I often suggest to clients called "10 Worst Questions." In it, you determine the 10 or so ugliest or most difficult questions you are likely to face.
Prepare and practice the ways you'd respond. Walton thought through the things reporters would likely ask and report on a story as salacious as this.
And with that in mind, he devised meaningful responses that would keep proper perspective on his own role, and his company's role, in the horrific event.
3. Get in front of the story, if possible
Walton did some research and discovered the story was already out in The Oregonian and several other regional outlets.
Each of the stories was written by the same reporter. Her email address was posted in every case.
So before any of the press could link the purchase to his company and conclude he was somehow complicit, Walton emailed the reporter and told her everything he could regarding the customer's purchase.
"I wanted to be sure I had the chance to tell my side of the story directly, before anyone could draw conclusions my company could have done anything wrong," he said.
His plan worked, and multiple stories came out that allowed Walton to act as an expert source on how to prevent and resolve situations like this (instead of being blamed, or worse yet, blamed by his absence in the public conversation on how the situation occurred).
4. Now that the floodlight is on you, what does that open up?
This is my advice to you: No matter how challenging a circumstance, this perspective will invariably open up at least a few ways to conclude the situation for good.
How did it come out for Walton? "In the short term, it's worked out fantastically," he said. "The paper covered it, and the local TV stations gave me plenty of video interviews to explain the situation. We received a lot of praise from the community."
Walton was lucky in that the story didn't go national, helped perhaps in part by the fact the Jared Fogle spokesperson for Subway was arrested the same day and became the scandal story that dominated the national news.
This whole event was a potential PR disaster that could have killed Walton's business; however, he notes that long term, it hasn't affected his business at all.
He acknowledges, however, the turn of events may change if authorities ever catch the guy who purchased the camera. The culprit, unfortunately, fled to the Philippines in the days before the police issued the arrest warrant.
One more note of advice: No matter who you are or the current state of your business, you should make it a point to be "on the record" and findable online for the values and mission you really do represent.
On the day a bad PR incident happens, it may be the best protection you have to give observers the evidence needed to form an accurate and balanced perspective of the bad news on their own.