Paragon Industries CEO Accused of Orchestrating $66 Million Federal Wire Fraud Scheme

Federal prosecutors in the Southern District of New York have brought a wire fraud charge against 53-year-old Derek Wachob, the chief executive of Sapulpa, Oklahoma-based steel pipe manufacturer Paragon Industries, alleging his involvement in a 66 million dollar scheme.

An indictment unsealed on November 18 claims that between October 2022 and August 2024, Wachob directed a fraudulent operation that targeted individual investors, a bank, an investment firm, and at least two steel pipe distributors.

The indictment states that Wachob solicited funds by promoting what appeared to be legitimate steel purchasing arrangements. He allegedly assured investors that their capital would be used to buy discounted steel through a separate entity, that the steel would be resold quickly at a profit, and that his own pipe company would purchase any remaining inventory. Prosecutors contend that these statements were “false or misleading,” and that the involvement of his company in guaranteeing the deals was misrepresented.

Instead of financing actual steel transactions, federal authorities allege that millions of dollars were diverted to maintain Wachob’s lavish personal lifestyle and to stabilize a business already facing serious financial problems. Court filings outline expenditures on “yachts, helicopters, private jets, and racing boats,” along with the alleged use of investor money to meet corporate obligations.

Wachob was taken into custody at his Sapulpa residence by FBI agents and made an initial court appearance in the Northern District of Oklahoma. He has since been released on a one-million-dollar bond and is expected to appear in the Southern District of New York before U.S. District Judge J. Paul Oetken.

The indictment further seeks forfeiture of any property connected to the alleged fraud. The single wire fraud charge carries a potential maximum sentence of 20 years in federal prison, though any sentence would ultimately be determined under federal sentencing guidelines should he be convicted. Prosecutors emphasized that Wachob has been charged but not convicted, and he remains “presumed innocent unless and until proven guilty in court.”

Bankruptcy shadows a key pipe supplier

The company widely identified in media reports as being at the center of the criminal allegations—Paragon Industries—has long been a major supplier of line pipe and oil country tubular goods for oil and gas operators and midstream companies, operating primarily from Sapulpa, Oklahoma. The business manufactures steel pipe products used across the energy sector and related industries.

Paragon traces its origins back to 1970, when Jack Wachob acquired Sapulpa Machine & Tool during a period when the oil industry played a dominant role in Creek County. The shop offered drilling contractors options to rent “fishing tools,” have machinists repair parts, or request a portable welder at any time of day.

The manufacturing side of the company began in 1981, when the first coil of steel ran through its production line. Over the years, the company expanded its downstream operations to support a full product portfolio, including the construction of a large OD pipe mill.

The firm’s financial struggles began well before the indictment surfaced. Paragon filed for Chapter 11 bankruptcy protection in May 2025, aiming to either reorganize or sell its pipeline and steel operations as an ongoing business. In its bankruptcy petition, the company reported assets and liabilities ranging between $100 million and $500 million.

The Chapter 11 proceedings placed Paragon Industries under court oversight as it negotiates restructuring with both secured and unsecured creditors. For customers and business partners across the oil and gas supply chain, the combination of a high-profile fraud allegation involving the CEO and an active bankruptcy case concerning a major pipe supplier has made this one of the most closely followed legal and financial developments in the regional steel and OCTG market.

By fLEXI tEAM