Federal prosecutors allege a 66 million dollar scheme built on steel deals tied directly to the oil and gas pipe trade.
Federal prosecutors in the Southern District of New York have charged Derek Wachob, 53, the chief executive of a Sapulpa, Oklahoma-based steel pipe manufacturer, Paragon Industries, with a single count of wire fraud in connection with an alleged 66 million dollar scheme. An indictment unsealed on November 18 alleges that, from October 2022 through August 2024, Wachob orchestrated a fraud that targeted individual investors, a bank, an investment firm, and at least two steel pipe distributors.
According to the indictment, Wachob solicited funds by pitching what appeared to be straightforward steel purchase opportunities. He allegedly told investors that their money would be used to buy discounted steel through a separate entity, that the steel would be quickly resold at a profit and that his pipe company would purchase any unsold inventory. Prosecutors say these assurances were false or misleading, and that his company’s role in backing the deals was misrepresented.
Instead of financing genuine steel trades, federal authorities allege that Wachob diverted millions of dollars to support an extravagant personal lifestyle and to shore up a business that was already under severe financial strain. Court filings describe spending that included yachts, helicopters, private jets, and racing boats, as well as the use of investor funds to meet the company’s obligations.
Wachob was arrested at his residence in Sapulpa by FBI agents and made an initial appearance in federal court in the Northern District of Oklahoma. He was later released on a one-million-dollar bond and is scheduled to appear in the Southern District of New York before U.S. District Judge J. Paul Oetken.
The indictment also seeks forfeiture of any property traceable to the alleged scheme. The wire fraud charge carries a statutory maximum sentence of 20 years in prison, although any eventual sentence would be determined by the court under the federal sentencing guidelines if he is convicted. At this stage, Wachob has been charged but not convicted, and he is presumed innocent unless and until proven guilty in court.
Bankruptcy shadows a key pipe supplier
The company at the center of the criminal case has been widely identified in press reports as Paragon Industries, a long-standing supplier of line pipe and oil country tubular goods to oil and gas operators and midstream companies, with major operations based in Sapulpa, Oklahoma. The business manufactures steel pipe products used in energy and related sectors.
In 1970, with the oil industry still a major player in Creek County, Jack Wachob purchased Sapulpa Machine & Tool as a service shop where drilling contractors could rent “fishing tools”, have a machinist repair a part, or even call a portable welder out to a location 24 hours a day. Paragon’s manufacturing element of the business began in 1981, when the first coil of steel rolled through the line. Since then, many downstream operations have been added to support the company’s complete product lines today, as well as the construction of a large OD pipe mill.
Paragon’s financial challenges predate the indictment. The company filed for Chapter 11 bankruptcy protection in May 2025, seeking to reorganize or sell its pipeline and steel operations as a going concern. In its bankruptcy petition, Paragon reported assets and liabilities in the range of $ 100 million to $ 500 million.
The Chapter 11 filing placed Paragon Industries under court supervision while it works through a restructuring process that includes its secured and unsecured creditors. For customers and counterparties across the oil and gas value chain, the combination of a high-profile fraud charge against the chief executive and an ongoing bankruptcy case over a critical pipe supplier has made the situation one of the most closely watched legal and financial developments in the regional steel and OCTG market.
