Former Raleigh Real Estate Developer Receives 27 Years in Multi-Million-Dollar Fraud Against Investors and Banks
|U.S. Attorney’s Office January 16, 2014|
RALEIGH—The United States Attorney’s Office announces that in federal court yesterday, Chief United States District Judge James C. Dever, III sentenced former real estate developer James Thomas Webb, 52, of Leland, to 327 months’ imprisonment, followed by five years of supervised release. The court further ordered that Webb make total restitution of $11,946,739.80 to his victims.
“James Webb betrayed the trust of investors and left neighborhoods in two states blighted with dilapidated homes. His lengthy prison sentence emphasizes the severity and impact of this type of crime on our communities and should reassure the public of the FBI’s commitment to hold these offenders accountable,” said John Strong, Special Agent in Charge of the FBI in North Carolina.
“The FDIC-OIG is pleased to join the U.S. Attorney’s Office and our law enforcement colleagues in announcing the sentencing of this individual whose criminal actions caused serious harm to the community, individual investors, and financial institutions. Mr. Webb’s sentencing should deter others who may pursue criminal behavior. This sentencing confirms that those who undermine the integrity of the financial system will be brought to justice and held accountable for their crimes,” commented Jason T. Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation’s Office of Inspector General.
At the sentencing hearing, evidence established that between 2002 and 2006, Webb operated various real estate companies, including Alpine Properties LLC and Webb Builders LLC for a profit. Webb, who took out a full page advertisement in the Triangle Business Journal in 2004, promised investors in multiple states quick, large, and safe financial gains by investing money with him. Webb promised investors that he would use their money to purchase, renovate, and resell properties to first-time home buyers in various states, including North Carolina, Virginia, and Tennessee. Webb convinced investors located in various states to purchase properties from his companies. The properties were supposed to have been fully renovated and worth approximately $65,000 each. Webb further promised to maintain the properties for investors and collect rent for them that would be used to fund mortgage payments.
The evidence established that despite his alleged philanthropic and humanitarian objectives, Webb carried out a fraud upon both the investors who gave cash to Webb and the banks and lenders who Webb caused to disburse loan proceeds. Evidence showed that the properties purchased by Webb’s investors were not fully renovated as Webb had promised. Evidence also showed that WEBB took money from one investor to pay other investors, instead of using all the money for the promised renovations. Webb also failed to maintain and rent the properties, as he promised. In spite of this, the evidence showed that Webb lived lavishly, residing in a multi-million-dollar mansion, driving expensive vehicles including a Bentley, traveling extensively, and otherwise paying himself handsomely.
The evidence further established that Webb conspired with former attorney, Amy Robinson, to systematically falsify closing statements associated with properties Webb caused investors to purchase. The government presented evidence that instead of paying off prior lien-holders out of the sales proceeds, as represented on the settlement statements, Robinson diverted the funds to the benefit of Webb.
The evidence also showed that Webb conspired with a former West Virginia appraiser, Larry Max McDaniel, and his associate, Jackie Gale Weaver, to falsify the appraisals associated with the properties purchased by investors. Although the appraisals stated that McDaniel physically inspected the properties, McDaniel never went to any of the more than 200 properties that Webb was supposed to have renovated. Instead, the appraisals and their contents were generated by Weaver, with the assistance of Webb’s employees and contractors. To justify Webb’s requested value of $65,000 per property; McDaniel and Weaver frequently used other Webb properties as comparable sales.
Evidence established that investors began to have difficulty reaching Webb when Webb failed to pay them the promised returns or when investors began to receive notices from city governments regarding the state of the properties. The government presented evidence that Webb abruptly left his north Raleigh mansion for Florida in 2004, where he eventually stopped taking calls from his investors. Even after causing catastrophic losses to his victims and leaving neighborhoods blighted with abandoned homes, Webb continued to market his investment strategies in Florida, on the Internet, and in a book he authored titled “Save Your Neighborhood.”
Although Webb took the witness stand at the sentencing hearing in his defense, he admitted upon cross examination that he committed the fraud nd that all the losses alleged by the United States were a foreseeable consequence of his crime. Multiple investors from North Carolina, South Carolina, Georgia, and California also appeared and spoke out against Webb at the hearing.
Investigation of this case was conducted by the Federal Bureau of Investigation, the United States Postal Inspection Service, the United States Department of Housing and Urban Development Office of the Inspector General, and the Federal Deposit Insurance Corporation Office of the Inspector General, with the assistance of the North Carolina Appraisal Board. Assistant United States Attorney William M. Gilmore prosecuted the case.