Montalban was mentally unstable, suffering from an abnormal fear of death and exhibiting delusions of grandeur. Montalban carefully created a set of forged documents purporting to show that Governor-General Ezra Gallivan was receiving an annual subsidy of N.A. £1.5 million from Kramer Associates President Diego Cortez y Catalán.
In early July 1899, while the C.N.A. was gripped by hysteria due to the Mexican invasion of Siberia, Montalban met with Councilman Fritz Stark and gave him the forged documents. Stark had the documents examined by a handwriting expert, who failed to detect Montalban's forgery. Stark then announced Gallivan's supposed treason in a speech to the Grand Council on July 10. The result was a wave of political violence later known as the Starkist terror in which hundreds of people were killed and thousands injured across the C.N.A.
Stark handed over Montalban's documents to Gallivan and to several members of the Council's Rules Committee at a meeting on July 19, while the political violence was still raging. Gallivan requested that the members of the Rules Committee investigate Stark's charges, and the members agreed, forming the Special Subcommittee of the Rules Committee to Investigate Charges of Treason the next day. The Special Subcommittee was able to determine that the documents were forgeries, and exposed Montalban's mental illness. Stark responded by recanting his accusations on August 6, 1899, and committing suicide the following day. Sobel does not reveal Montalban's fate, but he was presumably arrested by the Mexican authorities and fired from his position at the embassy.
Sobel's source for John Montalban's role in the Starkist terror is Allen Watterson's The Great Fear: Starkism in the C.N.A. (London, 1956).