Accused Raleigh entrepreneur goes national

“Webb would take the money and instead of refurbishing the houses, he would use it for his own purposes,” says Sink’s Raleigh attorney, James N. Jorgensen. In the suit, Jorgensen documented the various transactions involving the 36 houses in which Sink invested with Webb and Alpine Properties. Jorgensen’s paper trails show Webb buying and selling houses under the names of various corporate entities, including Grand Summit, the limited liability company of which Sink owned 75 percent and Webb the other 25 percent. In one example Jorgensen cites, land records show Alpine Properties bought one Bladenboro, N.C., house for just $13,000 on July 1, 2003. Three weeks later, Alpine “gifted” the house to Grand Summit, the partnership between Sink and Webb. In May 2004, land records show, Grand Summit in turn sold the property to John Sink for $67,000.

“Mr. Webb has illegally and fraudulently ‘flipped’ properties onto Mr. and Mrs. Sink, and he did so using grossly inflated appraisals,” says Jorgensen, who also named as defendants attorney Amy Robinson, who did most of Alpine’s legal work, and the two appraisers who provided the estimated values, Shawn Hays of Durham and Larry McDaniel of West Virginia. Hays and McDaniel did not return phone messages.

Webb, who did not return phone calls, continues to solicit new investors in his business model, in which he uses other people’s cash and/or credit to purchase dilapidated houses in North Carolina, Virginia and Tennessee and then claims to turn them around for sale or rent at large profits in just several weeks’ time. The plaintiff in the most recent lawsuit is not alone in his disillusionment with the venture.

“Everyone knows about him and everyone does nothing,” says California businessman Mike Farag, who in November 2004 invested tens of thousands in Webb’s refurbishment of a Memphis, Tenn., apartment building that Webb claimed was worth $5 million but turned out to be worth less than $1 million, Farag says. “What’s it going to take?”

While many former investors interviewed for this article say they’ve spoken with law-enforcement officials, so far neither the U.S. Attorney’s office in Raleigh nor the FBI have gone public with any investigations.

Sink and Farag have plenty of company; dozens of Webb’s current and former investors from across the state and across the nation have contacted the Independent since the December 2004 article. They detail deal after deal in which they say Webb didn’t deliver on his promises.

“Your article was only the tip of the iceberg,” says one former investor who asked not to be identified. “I brought investors to the table for James and when he was not truthful to me, and I figured out he was not doing what he said he would, I went back to the investors I’d brought and told them to get out.”

Alpine Properties’ tenants in eastern N.C. towns such as Rocky Mount and Lumberton have also called to tell stories of living in rental homes where sewage regularly backs up in showers, ceilings collapse, floors sink and rent checks are returned from the former Alpine office stamped “no such addressee.”

“All they did was throw these houses together and stuck people in them and four or five months later they’re all falling apart,” says one Lumberton tenant.

Yet Webb remains, apparently, unaffected.

“It’s been frustrating to all the investors that he continues to do this,” says Jorgensen. “If someone walks into a convenience store and robs it, they would be prosecuted. Yet here’s someone who has defrauded many people out of millions of dollars and no law enforcement agency that we know of has called on him to account for himself.”

Jorgensen points out that the civil court system can go only so far in demanding amends for wronged parties.

Prior to the Sink case, Webb’s other two large North Carolina civil lawsuits–one with a group of Alpine investors in Raleigh and the other with a coalition of clients from his earlier enterprise building upscale homes around the Triangle–settled privately last year.

In the two regulatory matters, the N.C. Real Estate Commission maintains an open investigation into Webb’s business practices, with no repercussions so far. The N.C. State Bar merely issued him a “letter of caution” in April 2005 for practicing law without a license. In that matter, Webb was represented by prominent lawyer and former U.S. Attorney and Judge Sam Currin, who was also known to accompany Webb on sales pitches and whose words appear in a hearty endorsement on the Web site of CitiRise.

Headquartered in Weston, Fla., CitiRise seemed headed for national fame two months ago, when Webb appeared on Fox News touting his role in the Riviera Beach project.

The controversial redevelopment has drawn ire from residents and property-rights advocates who protest the city’s proposal to acquire land by eminent domain–a plan made possible by a U.S. Supreme Court ruling in a New England case last year.

In a typically combative conversation with the hosts of Hannity & Colmes on Dec. 6, Webb bragged about being chosen for the project and cited his experience at rehabbing 500 properties in the last four years.

“I was brought into the project with the massive developer to create affordable housing and opportunity for economic empowerment,” Webb said.

But last week, the lead developer chosen by the city to oversee the massive project distanced himself from Webb and CitiRise, saying Webb had not been contracted for the job and that Webb’s national television interview came about through contacts with city officials, not his firm.

“We’re likely not to use James,” says Ian Meredith, the CEO of Portfolio Group and one of the key decision-makers. “We’ve had a little trouble pinning him down on financial matters . . . and where there’s smoke, there’s usually fire.”