UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 39041 / September 10, 1997 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 954 / September 10, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9398 ___________________________________ : In the Matter of : : ORDER INSTITUTING PUBLIC LYNN K. 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 Lynn K. Ross ("Lynn Ross"). II. In anticipation of the institution of these administrative proceedings, Lynn 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, Lynn 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 the Lynn Ross Offer, the Commission finds<(1)> the following: A. Lynn Ross was president and a director of Paragon Mortgage Corporation ("Paragon") from September 1, 1988 until his resignation on December 20, 1993. 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, Lynn 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 Lynn 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 Lynn 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 and 13a-1 thereunder. E. The Commission's complaint alleged that between 1990 and 1993 Lynn 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 statements and proxy statements materially misrepresented the operations and financial condition of Paragon in violation of generally accepted accounting principles. The complaint further alleged that Lynn Ross failed to make and keep accurate books and records, failed to establish and maintain adequate internal accounting controls, circumvented internal accounting controls, and lied to Paragon's independent auditors. <(1)> The findings herein are made pursuant to Lynn 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====== F. On August 26, 1997, without admitting or denying any of the allegations contained in the Commission's complaint, Lynn 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 Lynn Ross and accordingly, IT IS HEREBY ORDERED, effective immediately, that Lynn K. 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======