James Webb operated several real estate companies, including Alpine Properties LLC and Webb Builders LLC, for a profit between 2002 and 2006. Through a full page advertisement in the Triangle Business Journal, the defendant promised investors "quick, large and safe financial gains" by investing money with him, according to statements made at the sentencing hearing.
The investors' money was used by Webb to supposedly purchase, renovate and resell properties in North Carolina, Virginia and Tennessee, to first-time homebuyers for approximately $65,000 each. Additionally, Webb told investors that he would maintain the properties for them and collect rent that would be used to fund mortgage payments.
However, instead of conducting home improvements on the properties purchased by Webb's investors, court evidence revealed the defendant used this money to pay other investors. In general, Webb failed to maintain and rent the housing units as guaranteed.
As the scam was happening, Webb lived a lavish lifestyle by residing in a multimillion-dollar mansion, driving expense vehicles including a Bentley, traveling extensively, and earning a substantial paycheck, said the United States attorney's office.
"James Webb betrayed the trust of investors and left neighborhoods in two states blighted with dilapidated homes," says John Strong, special agent in charge of the FBI in North Carolina. "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."
In order for the scam to carry on, Webb conspired with former attorney, Amy Robinson, to systematically falsify closing statements associated with the properties, the Department of Justice said. 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.
Also, Webb conspired with a former West Virginia appraiser, Larry McDaniel, and his associate, Jackie Weaver, to falsify the appraisals purchased by investors. Although the appraisals say that McDaniel physically inspected the housing units, this actually did not happen for any of the 200 properties Webb was supposed to renovate.
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.
Investors tried contacting Webb when he failed to pay them the promised returns or when city governments started issuing notices about the state of the properties, but could not reach him because he fled North Carolina in 2004 for Florida.
The scam left many neighborhoods blighted with abandoned homes. At the sentencing hearing, upon cross examination, Webb admitted that he committed the fraud.
The court ordered Webb to make total restitution of $11,946,740 to his victims.