ABC11 talks with investment scheme suspect

July 8, 2008 3:58:00 AM PDT
After nearly two years and two separate trips to south Florida, we've finally tracked down Raleigh businessman James Webb.

When he pulled up to his house, we had some questions for the man investors say took millions of dollars in a failed real estate scheme.

    Steve Daniels: You know we've been trying to talk to you for a long time about what happened to all the money, the SEC says you took $20 million from people.
    James Webb: That's totally incorrect and if you'd read the report you'd see very clearly that's not the case.

In a federal lawsuit, the Securities and Exchange Commission says James Webb "defrauded investors through a real estate based investment scheme."

"A lot of people were hurt in dealing with James Webb," says Ralph McNeil. He and his wife Linda say they invested $80,000 in Webb's plan to remodel rundown houses across North Carolina and sell them to first time homebuyers.

"He just left," says McNeil, "just left in the middle of the night." He continues, "He has made a lot of money and many other people have had to suffer because of what he's done."

Government lawyers say Webb earned more than $20 million dollars between 2002 and 2006.

    Steve Daniels: Well, you understand that there are people who want to know what happened to their money.
    James Webb: And I know exactly what happened to this business, who destroyed my business and who tried to throw me under the train and I spent out of my ears and lost everything, not just for my investor partners, but trying to save these neighborhoods.
    Steve Daniels: There are people who say they've lost all their savings though.
    James Webb: Tell me about it, I filed Chapter 13 and I've lost everything I've had as well. Behind this model and what was done to me.

But, has he "lost everything?" As we discovered in South Florida, Webb is renting a house behind a guard gate for $2,700 a month. In front of the house is an Audi A4, an Infinity M35 and we saw Webb himself drive up in a brand new, shiny, black BMW M6. That car is worth $100,000.

    James Webb: It's not about cars, okay. It's about the model. But, do me the favor, and please just read the book.

James Webb writes about his business model in a book he paid to be published. He's on the front cover standing in front of his million dollar house in Raleigh and his Bentley. He writes: greedy joint venture partners and "boozy", "pompous negro" men and two of the largest banks in the country "joined in with a sagacious plan to tar and feather me and make me look like some gangster thug."

    Steve Daniels: But you know your investors are wondering where the money is.
    James Webb: Well, I'm also wondering where my money is, and there's some local people in Raleigh, NC that are behind destroying not just my business, but read my book, and that's all I'm going to say right now.

The SEC says Webb and his wife used investor money for resort vacations to the Caribbean and a "fleet" of luxury cars. It's a taste for the good life he seems to continue enjoying in South Florida despite the fact Webb says he's broke.

"This was a ponzi scheme, nothing more," says Brad Coren. He's a Fort Lauderdale lawyer who sued Webb. A judge ordered Webb to pay his client $97,000, but Webb has not complied.

"It angers and frustrates my client to see that this gentleman is living in the lap of luxury, when he has money taken from others," says Coren.

In his book, Webb denies any wrongdoing saying he's the victim of "corporate black on black attacks, worse than any gang bangers." He also blames banks for his business failure. He says they wouldn't loan money to black people in black neighborhoods, the people Webb was counting on to buy his fixed up houses.

    Steve Daniels: The money's not in an offshore account somewhere, it's not hiding in the Caribbean?
    James Webb: Well, I wouldn't say unfortunately, but absolutely not. I wish I had something from all that I lost. No sir, it's not.

"He's a liar," says investor Ralph McNeil, back in Raleigh. He's wondering if the good life Webb appears to continue living is funded with the money his family lost.

"He's going to tell that story as if he was the person that was, that was hurt. But, yet, I mean, he's still living the life of luxury," says McNeil.

Webb also says there's no way he could've "hoodwinked" the brilliant people who invested in his company. He says "financial geniuses" looked at his books and he passed the test with flying colors. In a letter to the Federal Judge handling the SEC lawsuit, Webb says he "never misappropriated any partner's funds." The judge has now issued a "Contempt of Court" order. The judge says he'll issue an arrest warrant if Webb doesn't provide an accounting of his assets by July 10th.

This investigation started nearly two years ago with a tip from a viewer. If you have a tip for us to investigate, email ABC11 Investigates.


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