Zabalaoui admitted that she opened post office boxes at UPS stores in Colorado and Delaware and used them to operate the purported corporate offices of the companies. Phone lines were also set up to receive messages whenever the clients had questions about their "investments." She also created fraudulent company letterheads and employees, and opened bank accounts in the names of Paragon Company and Baines Bailey Space & Direct in Metairie, La.
Zabalaoui would either deposit the checks or wire transfers that she received for Paragon Company, and deposit them into her Paragon Company bank account, or she would take advantage of the signed power of attorney she received from her clients for Omni Clearing, and either deposit the checks or wire transfers for Omni Clearing into her Baines Bailey account. On several occasions, clients called to request liquidation of part of their "investments." In an attempt to have the companies appear legitimate, she would then create what appeared to be correspondence between herself and the fraudulent employees and mail this correspondence to the clients. The correspondence would explain that she was trying to obtain funds and also to offer evidence that it would take time to liquidate the funds due to certain restrictions. This also afforded Zabalaoui time to convince other clients to invest money into Paragon Company or Omni Clearing in order to pay the requesting clients what they wanted liquidated.
Zabalaoui was able to further the scheme to defraud by creating and mailing false account statements that appeared to be from Paragon Company and Omni Clearing, to each requesting client's address. These account statements would detail items such as the account balances, as well as interest earned, thus making the investments appear profitable, when in fact the money had never been invested at all.
U. S. Postal Inspection Service investigated the case. The prosecution was handled by Assistant U. S. Attorney Jon Maestri and First Assistant U. S. Attorney Jan Maselli Mann.
Letten said Zabalaoui is out on bond and is to begin her sentence on September 11.