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
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission v. Wyatt Gene Ross, Lynn K. Ross, and Mickie E.
The Securities and Exchange Commission announced today that it has charged two Atlanta,
The three defendants are W. Gene Ross of Highlands Ranch, Colorado, his brother Lynn Ross of
All three are former officers of Paragon Mortgage Corporation, a now defunct mortgage banking
Gene Ross was Paragon's chief executive officer and chairman of its board, Lynn Ross was a
The complaint alleges that the Ross brothers misappropriated approximately $230,000 from
The complaint also alleges that from 1990 through 1994 the defendants overstated Paragon's
In some instances, Paragon reported net income when it should have reported net losses and in
In June 1990, Paragon's board of directors granted stock options to purchase 530,000 shares
annual financial statements by deleting $200,000 of compensation expense which had been
Additionally, Higgins-Hallke failed to report $24,961 of medical claims incurred during 1992
The Commission also charges that Gene Ross illegally sold Paragon common stock, and illegally
The complaint alleges that in December 1993, Gene Ross told his wife to conduct a meeting at
Gene Ross and Lynn Ross and Higgins-Hallke have each consented to a permanent injunction,
total of $65,000 of disgorgement of insider stock trading losses illegally avoided by him and
Lynn Ross has agreed to pay civil penalties in the amount of $25,000.
Previously, the Commission instituted administrative proceedings in which five CPAs, who
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