Question - when you took them over did you get all three websites?
paragonbuildinggroup.com/, paragonroofinggroup.com and paragonpaintinggroup.com
There is some pretty bad duplicate content between the building group site and the roofing group site and with the sites interlinking as they do, I would say Google noticed pretty quick.
I know you are limited as to what can be done but I would say explain to your client that each website needs to have content relevant only to what that particular website is offering - no duplicate content. If the building website wants to touch on roofing then link to the other website - that is fine. Honestly, I would personally rather see all of this put together on one website with different sections for the different services - then the other domain names could just 301 to the relevant sections of the mother website. Also - links. the building group website needs them badly. As far as what happened - there is no way to be 100% sure but I am guessing an algorithmic penalty - the way the three websites (that I found, there could be more) are set up could certainly look like an attempt to manipulate search results to the algorithms. Honestly... it probably was an attempt to manipulate search results, an attempt by the last vendor. Not a penalty for the duplicate content, mind you - but the duplicate content and interlinking etc... were probably signals that all added up to "hey, these websites are not following guide lines" this was just a quick look though - I could be wrong.