Department of Justice Charges Steel Pipe CEO with $66 Million Fraud Scheme

On November 18, federal officials from the Southern District of New York and the FBI unsealed a charge of wire fraud against David Wachob, CEO of Paragon Industries, a manufacturer of steel pipes. Wachob, accused of using $66 million from friends, investors and banks to enrich his own lifestyle expenses and prop up his company, was arrested in Oklahoma and released on $1 million bail.

The grand jury charge was unsealed U.S. Attorney for the Southern District of New York Jay Clayton and Assistant Director in Charge of the New York Field Office of the FBI Christopher G. Raia. According to the indictment, Paragon Industries was a successful business until about 2022, when it “began facing financial distress, eventually struggling to pay vendors and make payroll for its hundreds of employees.”

Starting in 2022, Wachob began telling pipe distributors, investors, a bank and an investment firm that he would spend investment funds to buy steel from a second company he was associated with and resell it at a profit, including to Paragon Industries if necessary. Those investors were never paid back, the Justice Department says, and Wachob used the funds to increase Paragon inventories, pay off outstanding purchase orders, and purchase expensive consumer goods.

“To the extent Wachob used any portion of the victim investors’ funds to purchase steel, those purchases were inconsistent with the investment scheme Wachob had represented,” the indictment says.

The scheme wasn’t enough to keep the company afloat. Paragon laid off employees in December 2024 and entered a court-ordered receivership in March after defaulting on an $18 million bank loan. In May 2025, Paragon Industries declared bankruptcy, and in September, federal authorities in Florida seized Wachob’s yacht. According to local news, Wachob and Paragon have been accused of not paying employees and have become involved in $200 million in lawsuits since September 2024.

According to the Department of Justice, Wachob faces a maximum sentence of 20 years in prison if convicted.