Paragon's top execs quit after probe.

SMYRNA, Ga. - Paragon Mortgage Corp. said W. Gene Ross resigned as chairman and chief executive and his brother, Lynn K. Ross, resigned as president and chief operating officer.

Paragon's board, now led by outside director M. Leon Jensen as chairman, selected Bruce R. Diaddigo as president and chief executive officer. He had been an executive vice president.

Linda S. Popp, another executive vice president, will become more active in administering the production of retail mortgages.

Independent Counsel Engaged

The management changes were recommended by a special committee of the board who engaged independent counsel to investigate certain irregularities.

The committee concluded the Rosses had diverted PMC assets for their own benefit.

The Rosses have agreed to make full restitution and to terminate their rights under their employment agreements, including all rights to severance pay.

Paragon also announced that it was likely that its financial statements for the fiscal year ended Sept. 30, 1992, would have to be restated to reflect a change in accounting treatment of certain revenues that would shift substantial amount of pre-tax income to fiscal 1993.

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