Idaho Officials File Fraud Suit Against Irvine Metals Firm

Idaho authorities said Monday that they have filed a 67-count civil suit alleging fraud, misrepresentations and other violations of Idaho securities laws against Paragon Investments, an Irvine precious metals brokerage.

In its suit, filed in state court, Idaho Finance Director Tom McEldowney alleged that Paragon was operating in Idaho without registering itself or its securities with authorities there.

Idaho officials said that the company, which used newspaper advertisements, brochures and telephone solicitations, promised investors that they could control $30,000 in silver by investing only $5,000. Officials added that the company’s salesmen were telling investors that they would actually own the silver.

Also named in the suit, which alleges 25 counts of misrepresentation, 25 counts of failure to disclose important information to investors and 17 counts of fraud, was Marvin Brandon, Paragon’s president; Jack Christian, vice president, and three brokers.

When reached Monday, Brandon said that the suit had been referred to the American Investment Metals Commission, which he described as a Santa Ana organization recently formed to police and “bring legitimacy” to the fraud-ridden precious metals brokerage business.

“We were just made aware of it (Monday),” he said. “I’ve got a lot to say once I read the allegations.”

In addition to a court order preventing continued operations in Idaho by Paragon, the suit seeks restitution of “the thousands of dollars” the company allegedly has taken from Idaho residents.

McEldowney said that because Paragon was issuing certificates of ownership to investors, the company was actually selling securities. The Finance Department, which oversees banks, insurance companies and the like, files dozens of suits against alleged boiler room operations each year, he added.

“We probably average 20 to 30 a year, although not all are exactly like this,” McEldowney said. “Last year, we filed 107 suits against companies selling oil and gas leases.”

Although in many cases, the alleged boiler room operations are located out of Idaho, McEldowney said that the civil suits usually are sufficient to prevent unscrupulous operators from preying on Idaho residents.

“We usually go civil first and if we can file criminal charges, we’ll do so later,” he said. “We’re primarily interested in keeping people from getting fleeced.”