UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 39040 / September 10, 1997 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 953 / September 10, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9397 ___________________________________ : In the Matter of : : ORDER INSTITUTING PUBLIC WYATT GENE ROSS : PROCEEDINGS PURSUANT TO : SECTION 15(b)(6) OF THE Respondent. : SECURITIES EXCHANGE ACT OF : 1934 MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS : ___________________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") be, and they hereby are, instituted against Wyatt Gene Ross ("Gene Ross"). II. In anticipation of the institution of these administrative proceedings, Gene Ross has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings, and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, Gene Ross, without admitting or denying the findings set forth herein, except as to the entry of the injunction set forth in paragraph III.F. and the Commission's jurisdiction over him, both of which are admitted, consents to the entry of this Order Instituting Public Proceedings Pursuant to Section 15(b)(6) of the Exchange Act, Making Findings and Imposing Remedial Sanctions. III. Based on this Order and Gene Ross' Offer, the Commission finds<(1)> the following: A. Gene Ross was chief executive officer and chairman of the board of Paragon Mortgage Corporation ("Paragon") from January 2, 1989 until his resignation on December 20, 1993. At various times, he also served as Paragon's treasurer, principal financial officer and principal accounting officer. B. Paragon was a mortgage banking firm headquartered in Smyrna, Georgia. It was incorporated in Illinois on May 27, 1988, commenced operations in September 1988, conducted its initial public offering on August 8, 1989, and was dissolved on October 1, 1994. Paragon's operations included originating residential real estate loans and selling the resulting mortgage secured notes in the secondary mortgage market, brokering mortgage loans and servicing mortgage loans. Paragon's common stock was registered pursuant to Section 12(g) of the Exchange Act. C. During 1990, 1991, 1992, and 1993, Gene Ross participated in the offering of Paragon's common stock, which was a penny stock. D. On August 22, 1997, the Commission filed a civil injunctive action against Gene Ross and others [Securities and Exchange Commission v. Wyatt Gene Ross, Lynn K. Ross, and Mickie E. Higgins-Hallke, Civil Action No. 97-CV-2431-JEC, (N.D. Ga.)], alleging that Gene Ross violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b), 13(b)(5) and 14(a) of the Exchange Act and Rules 10b-5, 13b2-1 13b2-2 and 14a- 9 thereunder, and charging him with liability, as a control person, for violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. E. The Commission's complaint alleged that between 1990 and 1993 Gene Ross prepared or assisted in the preparation of certain periodic reports, registration statements and proxy statements filed on behalf of Paragon with the Commission. The reports, registration statement and proxy statements materially misrepresented the operations and financial condition of Paragon in violation of generally accepted accounting principles. Also, one of these reports failed to disclose a disagreement between Paragon and its then outside auditors. The complaint further alleged that Gene Ross failed to make and keep accurate books and records, failed to establish and maintain adequate internal <(1)> The findings herein are made pursuant to Gene Ross' Offer and are not binding on any other person or entity named as a respondent in this or any other proceeding. ======END OF PAGE 2====== accounting controls, circumvented internal accounting controls, and lied to Paragon's independent auditors. F. On August 26, 1997, without admitting or denying any of the allegations contained in the Commission's complaint, Gene Ross consented to the entry of an order of permanent injunction permanently enjoining him from violations of Section 17(a) of the Securities Act, and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5) and 14(a) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1, 13b2-2 and 14a-9 thereunder. IV. Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Gene Ross and accordingly, IT IS HEREBY ORDERED, effective immediately, that Wyatt Gene Ross be, and hereby is, barred from participating in any offering of penny stock. By the Commission Jonathan G. Katz Secretary ======END OF PAGE 3======