Real estate entrepreneur James Webb may have left Raleigh for new ventures in Florida, but the trail of disenchanted investors he’s left across the country finally has authorities closing in from the Triangle to California.

Webb, the proprietor of Alpine Properties and CitiRise Redevelopment, made a name for himself locally by convincing people to loan him large sums of money to rehabilitate distressed houses in blighted communities in Eastern North Carolina towns such as Rocky Mount. Webb claimed to use the capital to improve the houses and flip them for a much higher sales price, but many clients say they never saw any return on their investment and in some cases wound up holding large debts in the form of inflated mortgages on worthless real estate.

Many former business associates have sued Webb and his companies in civil court cases from Wake County to the coast seeking to recover losses, but the former N.C. Central University student body president and Raleigh businessman managed to dodge any repercussions from authorities–until recently.

This summer, the state of California issued a “desist and refrain order” forbidding Webb from doing business there, and the N.C. Real Estate Commission obtained a court order preventing him from dealing in real estate here and forced him to surrender the corporate real estate license held in Alpine Properties’ name.

Erik Brunkal was handed the James Webb/CitiRise file during his first week of work as a new corporations counsel for the California Department of Corporations in June. He interviewed five or six California residents who’d given Webb money on promises of gigantic returns–including one man who’d given Webb more than $1 million, $40,000 at a time.

Webb pitched a deal in which investors would give him $40,000 and he’d spend $15,000 buying a distressed house and the other $25,000 fixing it up, according to the state of California’s order. In return, investors were promised the return of their original $40,000, plus either $5,000 and a renovated home with renters in place as an ongoing investment, or the return of their original $40,000 plus half of anything over and above the $40,000 if the house was sold, according to the desist and refrain documents. Webb claimed an average resale price of $65,000.

“Real estate is really, really expensive out here, and so Webb would show people pictures of these North Carolina houses that needed renovating, and convince them he could fix them up and flip them,” Brunkal said. “One individual did this 20 or 25 times.”

That particular investor is now holding roughly $4 million in mortgages on run-down houses all the way across the continent. In all, California officials estimate that Webb and a Los Angeles man he partnered with, Jeffrey Lustgarten, sold at least 30 investment contracts of $40,000 each in that state.

The houses were in “crack neighborhoods or slums” and never rehabilitated, and Webb “merely kept the remainder of the investors’ $40,000” as well as any rental income, according to the California order. In many cases, California officials assert, Webb then refinanced the houses under “fraudulent appraisals and mortgages” that inflated their value, keeping the majority of the profit realized from refinancing for himself and “eventually leaving the investor to pay the mortgage on the virtually worthless piece of uninhabitable property.”

Webb seems to be obeying his order, Brunkal says–violating it would be a felony.

Back in the Tar Heel state, the N.C. Real Estate Commission, which regulates the industry here, signed a legal agreement with Webb, dated July 25, outlining Webb’s violations of real estate regulations here including managing rental properties without a license to do so. In a consent order entered in Wake County Superior Court, commission officials and Webb, acting for himself, CitiRise and Alpine Properties, agreed that Webb would be “permanently restrained from acting as or holding himself out to be a real estate broker” and prohibited from listing, selling or negotiating the purchase, sale or exchange of real property until he’s licensed.

In a separate legal agreement with the commission, Webb agreed to surrender for at least a year the real estate license held by Alpine Properties. When he relocated to the Fort Lauderdale area in late 2004, Webb shuttered that company, which was headquartered on Falls of Neuse Road in North Raleigh, but civil cases arising from his business dealings are still pending in local courts, including one in which Charlotte resident John Sink is seeking to recover more than $2 million he says Webb swindled from him.

Other local Webb investors say they have been interviewed by investigators in the U.S. Attorney’s office in Raleigh over the last two years, indicating that federal authorities may be looking into Webb’s dealings, but officials there have consistently said they cannot discuss cases until and unless charges are filed.

“We can neither confirm nor deny any active investigations,” Elisabeth Regan, spokesperson for the U.S. Attorney’s office in Raleigh, said last week. Cases are not made public unless and until charges are filed, and even then may be sealed depending on the circumstances, she said.

Webb, meanwhile, wrote his investors a two-page letter in June explaining that he has been rendered unable to meet his various obligations to them by three factors: Sink’s lawsuit, which he says is “full of wild allegations of conspiracy and fraud”; the agreements with the Real Estate Commission that limit his business activities; and bad press, in the form of “adverse publicity in the Independent.” (See “Smooth operator,” Dec. 8, 2004, and “Accused Raleigh entrepreneur goes national,” Feb. 15, 2006.)

“I am still trying to avoid bankruptcy and to reconfigure my business model so that I can make a living while I continue on with my dream of creating affordable housing and jobs in communities that need them,” Webb wrote.