UNITED STATES SECURITIES AND EXCHANGE COMMISSION

     Litigation Release No. 15474 / September 4, 1997

     Accounting and Auditing Enforcement
     Release No. 951 / September 4, 1997

     Securities and Exchange Commission v. Wyatt Gene Ross, Lynn K. Ross, and
     Mickie E. Higgins-Hallke
     (N.D. Ga., Civil Action No. 1-97-CV-2431-JEC)

          The Securities and Exchange Commission announced today that it has
     charged two Atlanta, Georgia residents and a Denver, Colorado man with
     fraud.  The three defendants are W. Gene Ross of Highlands Ranch, Colorado,
     his brother Lynn Ross of Marietta, Georgia, and Mickie Higgins-Hallke of
     Smyrna, Georgia.  All three are former officers of Paragon Mortgage
     Corporation, a now defunct mortgage banking company formerly headquartered
     in Smyrna, Georgia.  Gene Ross was Paragon's chief executive officer and
     chairman of its board, Lynn Ross was a director of Paragon and its
     president, and Higgins-Hallke was Paragon's chief financial officer.

          The complaint alleges that the Ross brothers misappropriated
     approximately $230,000 from Paragon over a five-year period by causing
     Paragon to repay personal loans with corporate funds, and by personally
     intercepting checks remitted to Paragon and endorsing them for their
     personal benefit.  The Ross brothers concealed this theft from Paragon's
     shareholders and also misled Paragon's independent auditors concerning
     their theft.  

          The complaint also alleges that from 1990 through 1994 the defendants
     overstated Paragon's income in various annual and quarterly financial
     statements filed with the Commission.  In some instances, Paragon reported
     net income when it should have reported net losses and in other reports,
     Paragon understated its net losses by over 200% and overstated its income
     by 225%.  

          In June 1990, Paragon's board of directors granted stock options to
     purchase 530,000 shares of Paragon's common stock, worth $258,750, to the
     Ross brothers and four other Paragon employees.  The Commission alleges
     that Gene Ross failed to report this transaction in Paragon's June 30, 1990
     quarterly and September 30, 1990 annual financial statements.  The
     Commission also alleges that Gene Ross altered Paragon's September 30, 1990
     annual financial statements by deleting $200,000 of compensation expense
     which had been recorded in Paragon's books and certified by Paragon's
     independent auditor.

          The Commission's complaint also charges that Gene Ross and Higgins-
     Hallke inflated the income reported in Paragon's September 30, 1992 annual
     financial statements by improperly reporting $814,949 of gains from the
     sale of certain loans.  Additionally, Higgins-Hallke failed to report
     $24,961 of medical claims incurred during 1992 related to Paragon's self-
     insured employee medical plan.  

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          The Commission also charges that Gene Ross illegally sold Paragon
     common stock, and illegally tipped three members of his family to sell
     their Paragon common stock, before the Ross brothers' misconduct was
     publicly disclosed.  The complaint alleges that in December 1993, Gene Ross
     told his wife to conduct a meeting at their house with Gene Ross' two adult
     sons and his wife's brother.  At the meeting, Gene Ross' wife, on her
     husband's instructions, tipped these three family members, who were
     employees of Paragon and whom Gene Ross knew held Paragon stock. 
     Subsequent to this meeting, Gene Ross' sons and brother-in-law sold Paragon
     stock.

          Gene Ross and Lynn Ross (the "Ross brothers") and Higgins-Hallke have
     each consented to a permanent injunction, without admitting or denying the
     allegations set forth in the complaint, which enjoins them from violating
     the antifraud, reporting, books and records, and internal accounting
     control provisions of the federal securities laws.  The Ross brothers have
     also consented to be permanently enjoined from violating the proxy
     provisions of the federal securities laws.  Gene Ross has agreed to pay a
     total of $65,000 of disgorgement of insider stock trading losses illegally
     avoided by him and his family plus pay prejudgment interest thereon, and
     civil penalties.  Lynn Ross has agreed to pay civil penalties in the amount
     of $25,000.  Higgins-Hallke will not be required to pay civil penalties
     based upon her inability to pay such penalties.  In addition, all three
     defendants have agreed to be barred from acting as officers or directors of
     public companies.

          Previously, the Commission instituted administrative proceedings in
     which five CPAs, who served as Paragon's independent auditors at various
     times from 1990 through 1993, were charged with having engaged in improper
     professional conduct during their work for Paragon.  Those auditors settled
     the proceedings without admitting or denying the charges against them.  (In
     re Langford et al., Securities Exchange Act Release No. 38249; In re Couch,
     Securities Exchange Act Release No. 38250).




















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