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								September 28, 2005
Zip+4 Code:  20549-3561

Via Fax & U.S. Mail

Mr. Paul Danner
Chief Executive Officer
Paragon Financial Corporation
2207 Sawgrass Village Drive
Ponte Verde Beach, FL 32082

RE:	Paragon Financial Corporation (the "Company")
	Form 10-K for the Fiscal Year Ended December 31, 2004
	Form 10-Q for the Quarter Ended June 30, 2005
	Proxy Statement Filed on Schedule 14A
	File No. 000-27437

Dear Mr. Paul Danner:

      We have reviewed your filings that are referenced above.  We
have limited our review to your financial statements and related
disclosures, and we have the following comments.  Where indicated,
we
think you should revise your document in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary.  Please be
as
detailed as necessary in your explanation.  In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure.  After reviewing this information, we
may
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects.  We welcome
any
questions you may have about our comments or any other aspect of
our
review.  Feel free to call us at the telephone numbers listed at
the
end of this letter.

Form 10-K for the Fiscal Year Ended December 31, 2004

Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations

Liquidity and Capital Resources, page 21

1. We note per your MD&A disclosures that you are actively
discussing
the restructuring of your company`s debt, and that you have
modified
the terms of your revolving line of credit, your outstanding
convertible debentures, and the note payable to your former
related
party.  Please tell us how you have accounted for the modification
of
each of these debt instruments and the accounting literature that
you
have used to account for these debt modifications.  We may have
further comment upon receipt of your response.

Financial Statements

Consolidated Balance Sheets, page F-4

2. We note that your company carried a goodwill balance of
$822,000 on
its balance sheet at December 31, 2004.  In light of your
company`s
losses from operations during each of the past three years,
negative
cash flow from operating activities during these periods, negative
working capital at both December 31, 2004 and 2003, and the
substantial doubt about your ability to continue as a going
concern,
please tell us why you do not believe that your goodwill balance
is
impaired at December 31, 2004.  In your response, please provide a
detailed discussion of your assumptions and the factors considered
when performing your annual impairment test.

Notes to the Consolidated Financial Statements

Note 1. Principles of Consolidation, Basis of Presentation and
Significant Accounting Policies

Acquisitions, page F-9

3. We note the disclosure on page F-9 indicating that the Company
valued the 52,329,735 shares of common stock issued in connection
with
the acquisition of PGNF`s common stock at $6.4 million or
approximately $.122 per common share. Please tell us in further
detail
how the Company determined the value assigned to the shares issued
in
connection with this transaction and explain how the valuation of
these shares complied with the guidance outlined in paragraph 22
of
SFAS No.141.

Allowance for Loan Repurchases and Premium Recapture, page F-11

4. Please revise to include Schedule II with respect to the
Company`s
allowance for loan repurchases and premium recapture. Note that
this
schedule should be presented for each period presented in your
statements of operations and should be examined by your
independent
registered public accountants. Refer to the requirements of Rule
5-04
of Regulation S-X.

Impairment, page F-12

5. Please revise the notes to the Company`s financial statements
to
include all of the disclosures required by paragraph 47 of SFAS
No.
142 with respect to the goodwill impairment charge recognized
during
2004.

Note 2. Discontinued Operations, page F-16

6. Please tell us how you determined the amount of the $4,948
credit
made to additional paid in capital in connection with your
disposal of
PNGF. In this regard, please explain how your receipt of
52,239,735
common shares valued at $3,140 and 1,800 Series E shares plus
accrued
dividends valued at $1,998, resulted in a credit to additional
paid in
capital of this amount.

7. Please tell us and revise Note 2 to disclose how the loss on
disposal of PNGF of $102,000 was calculated or determined and
revise
your consolidated statements of operations to reflect this loss as
a
component of discontinued operations. Additionally, please revise
Note
2 to include all of the disclosures required by paragraph 47 of
SFAS
No.144.

Note 5. Goodwill, page F-18

8. Please tell us and revise Note 5 to disclose the factors that
contributed to a purchase price for the acquisition of PHF that
resulted in the recognition of goodwill. Refer to the requirements
of
paragraph 51b of SFAS No.141.

9. In addition, please explain why none of the purchase price for
the
acquisition of PHF was allocated to identifiable intangible assets
other than goodwill.

Note 8. Stockholders` Deficiency

Stock Purchase Warrants, page F-20

10. Please tell us and revise Note 8 to explain how you valued and
accounted for the stock purchase warrants that were issued as part
of
the convertible notes offerings in December of 2002 and March of
2003.
Also, tell us and disclose in your financial statements how you
determined the amount of the beneficial conversion feature
associated
with the convertible notes and indicate the period over which that
amount will be recognized as expense in your financial statements.
Your response and your revised disclosure should clearly explain
how
the treatment used complied with the requirements of EITF 98-5 and
00-
27, as applicable.

Note 10. Income Taxes, page F-25

11. Please tell us why you do not believe it is necessary to
record a
valuation allowance for your entire deferred tax asset balance
despite
your company`s significant losses for the last three years and the
substantial doubt about your company`s ability to continue as a
going
concern.  In your response, tell us the specific assumptions that
your
have relied upon to determine that it is more likely than not that
the
unreserved portion of your deferred tax assets will be recognized.

Form 10-Q for the Quarter Ended June 30, 2005

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 5. Goodwill, page 12

12. Please tell us and revise Note 5 to disclose the factors that
contributed to a purchase price for the acquisition of FCM which
resulted in the recognition of goodwill. Refer to the requirements
of
paragraph 51b of SFAS No.141.

13. In addition, please explain why none of the purchase price for
the
acquisition of FCM was allocated to identifiable intangible assets
other than goodwill.

14. Please explain why you have not provided audited financial
statements and pro forma financial information with respect to the
acquisition of FCM in a report on Form 8-K in accordance with Rule
3-
05 and Rule 11-01 of Regulation S-X.  If you do not believe this
acquisition met the materiality thresholds outlined in Rule 3-05
of
Regulation S-X, please provide us with the computations prepared
in
support of this conclusion.

Schedule 14A Proxy Statement

Equity Compensation Plan Information

15. The number of outstanding options and warrants at December 31,
2004, as disclosed in your Schedule 14A Proxy statement is
inconsistent with the disclosures provided in Note 8 to your
audited
financial statements for the year ended December 31 2004. Please
reconcile and revise these disclosures.

       As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response.  You may wish to provide us with marked copies of
the
amendment to expedite our review.  Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested information.  Detailed cover letters greatly
facilitate
our review.  Please understand that we may have additional
comments
after reviewing your amendment and responses to our comments.

	 We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing
includes all information required under the Securities Exchange
Act of
1934 and that they have provided all information investors require
for
an informed investment decision.  Since the company and its
management
are in possession of all facts relating to a company`s disclosure,
they are responsible for the accuracy and adequacy of the
disclosures
they have made.

	In connection with responding to our comments, please
provide, in
writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal
securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division
of Corporation Finance in our review of your filing or in response
to
our comments on your filing.

	You may contact Jeffrey Sears at (202) 551-3302 or the
undersigned at (202) 551-3813 if you have questions regarding our
comments on the financial statements and related matters.

      Sincerely,

      					Linda Cvrkel
								Branch Chief

Via facsimile:	Mr. Scott L. Vining, CFO

Mr. Paul Danner
Paragon Financial Corporation
September 28, 2005
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