After unwitting investors have been duped out of five- and six-figure sums for nearly a decade, federal investigators are finally moving to criminally prosecute the perpetrators of a real estate swindle that began in Raleigh and spread across the nation. In the scam, which has been labeled a Ponzi scheme, self-proclaimed "entrepreneur" James Thomas Webb convinced strangers to pony up both cash and their good credit to secure mortgages on dilapidated houses. In return, Webb promised to rehabilitate the homes and resell them at enormous profits while revitalizing blighted neighborhoods and employing young, low-income African-American men.
Last week, Amy Robinson, the Rolesville lawyer who served as the closing attorney on Webb's real estate deals from 2002 to 2006, was charged with conspiring to defraud mortgage lenders on at least 40 loans totaling $2.5 million, according to court documents filed March 22 in the Eastern District of North Carolina. Robinson is accused of falsifying settlement documents on transactions conducted by Webb through his many companies, which use a variety of names, including James T. Webb Master Builders, Alpine Properties, Citirise and The Webb Affordable Housing Model or WAHM.
Robinson, who was also disbarred in December 2008 for her role in the scheme, waived her right to a grand jury hearing in agreeing to the filing of the charges, said her attorney, David Freedman. Such a procedural move generally indicates that a defendant plans to enter a plea deal with prosecutors, Freedman said, but he declined to discuss specifics.
"Ms. Robinson has met with federal authorities and has been very candid and truthful about activities that occurred when she was doing the closings for Mr. Webb, and she plans to continue to do so," Freedman said. "Unfortunately, Ms. Robinson was a very young lawyer recently out of law school, and she was very easily impressed by people more experienced than she."
Robinson is scheduled to plead to the charges at a hearing May 11, according to a spokeswoman for the U.S. District Court. The charges represent the first indication that federal authorities plan to pursue a criminal case against Webb. Following agency policy, the spokeswoman declined comment on whether Webb is under investigation.
Webb relocated to Florida several years ago. He continued operating, despite a December 2004 exposé in the Independent; being barred by state regulators in North Carolina and California from doing business in those states; and a lengthy civil case prosecuted by the U.S. Securities and Exchange Commission in Florida. The SEC case ended in July 2009 with a judgment against Webb in which he is "permanently enjoined and restrained" from operating the fraud scheme. In closing its case, the SEC retained the option to force Webb to surrender "ill-gotten gains" to be returned to investors, with interest. SEC lawyers have been investigating Webb's personal finances since the judgment against Webb last summer and plan to return to court later this year to ask a judge to order the return of investors' funds, said David Williams, the lead prosecutor on the case.
Webb's victims have included Triangle high-tech company executives and N.C. State basketball coach Sidney Lowe, as well as working-class people who lost their life savings when Webb failed to renovate the houses and absconded with both their cash and the proceeds from mortgages they secured, leaving his "partners" with debt payments on run-down houses, many of which ended up in foreclosure, according to court documents.
Blytheville, Ark., insurance agent Bill Kenner was so impressed by Webb's mission and plan to "clean up our town" that he invested $55,000 in two of Webb's houses there in late 2007 and early 2008—long after the SEC had begun pursuing its civil case against Webb. True to his pattern, Webb never completed the construction work or delivered on the promised return of Kenner's capital plus 50 percent of the profits on the sale of the rehabbed houses, Kenner says.
"It's the perfect crime. He comes into a town and finds trusting people, and his story is awesome," a disgusted Kenner said in a phone interview this week. "I just don't know how he stays out of jail."