Top 10 Reasons Why Johnson Is a Flaming Idiot

As we recounted in our blog post, The Dog Lover Who Kills Puppies, the investors peacefully took over the management of the unprofitable GGC farm in late October 2014. During our tenure, we

  • cleaned the unkempt house and office–no easy feat,
  • built a guard house at the gate,
  • detailed the Jeep,
  • boarded up or hung plastic over the empty doorways and windows in the two main houses,
  • maintained the neglected grounds,
  • paid the workers their three to four months back pay and payroll deductions for their health insurance and pensions,
  • sold the junk–and we mean junk–in the barns and around the grounds, supplementing the farm income to pay salaries and benefits,
  • replaced a stolen transformer that powered a well critical to the orchards,
  • maintained the aging irrigation system,
  • continued the harvest and sales of farm products,
  • maintained the health of the orchards under very difficult conditions,
  • supplemented the farm income from our pockets to pay all salaries,
  • hosted several investors who visited the farm, and
  • collected forensic evidence from the premises.

We have our agronomist, Renzo Rezzio, our farm manager, Diego Loja, and our Recovery Team Manager, Kenny Carpenter, to thank for these accomplishments. Without their clever cost cutting, ingenious ways of maximizing revenue, and dedication to keeping morale high, the place would have deteriorated badly–as it is now.

Since April 21 2015, when he sent four armed thugs to the farm to detained two of our workers at gun point and kick out our managers, Johnson has been squatting at the Lepe farm.

For a while Johnson was a busy beaver, harassing and threatening several former employees and investors with cops, lawyers, and libel. Then he turned to making idiotic videos where he accused the Recovery Team of heinous crimes, such as pruning the trees, and emptying the pool for the winter. Qué horror. He’s currently in a rut, writing bizarre Facebook posts. How many lies can he pack into one sentence? Let’s see.

“As always, we look forward to positive growth, as we complete approvals for all of the new GGCers to come enjoy organic food, clean water and a great community.”

Former developer Johnson doesn’t have the money to apply for approvals. When he had our money he didn’t do it anyway, why would he now? There aren’t any new GGCers. Who in their right mind would get involved with the author of these inflammatory posts? “Oh yes, Li’l Kenny, please sign me up to piss money away on a non-existent lot. I’d love to be the next victim of your Facebook flame.” There’s no organic food and never was. All he did was mock up a pdf brochure with page after page of lists of vegetables. That’s as close as this guy’s ever gotten to a turnip. The farm isn’t organic. The water has a high coliform count. And where’s the community? The property is a dry rock in the Chilean desert with a half renovated hacienda occupied by a lone psychopath. But hey, it’s where the world is coming to…

One internet source actually picked up and reprinted his libel. This is the rough equivalent of giving Bernie Madoff free advertising space after his Ponzi became public knowledge.

Clearly, Johnson is so busy pursuing Chilean swindler, Del Real, and getting subdivision approvals that he can spend his days–when he isn’t hounding innocent people with ambulance chasers and Mafiosi–plotting his next Facebook victory. Well, we say, “Great. Please, post all you want. We hoot and howl with laughter with every post.”

There were so many smart moves Johnson could have made over the past year. He could have socked away a few bucks and left when the jig was up. He could have taken the exit we offered him in October and gone to another country to figure out his next scam. He could have continued to hide out in Paraguay in an RV—there are worse things. But Li’l Kenny just couldn’t stand being irrelevant. He struck back at us horrible “clients” who demand to be called INVESTORS and showed us who’s boss. In the process he gave us…

The GGC Recovery Team Top 10 Reasons Why Li’l Kenny Johnson Is a Flaming Idiot

10. He took back the property AFTER the summer harvest so he has no farm revenue to steal.

9. He let everyone know where he is, including all his creditors who will come from far and wide for payment.

8. He pissed away the pocket money investor Jerry Folta gave him, paying for stupid lawyer tricks rather than his living expenses.

7. He’s now got the utility bills of a farm rather than an RV.

6. Taking over the farm means he took over our bills just as we finished preparing our criminal case. Now we can spend all our money prosecuting him.

5. He used armed thugs to terrorize the workers, ensuring nobody will work for him again—except for drug addled lackeys, of course.

4. Since he won’t be able to get workers, he’s opened the farm up to theft, poaching and vandalism. Trust us, someone will be there every night. It is Chile, after all.

3. He took over just in time for SII, the Chilean IRS, to pay him a visit.

2. He has to pay his personal thug, Thornton, long enough to convince him to swindle his mother out of $100k and hand it over. Yes, friends, that’s Li’l Kenny’s iron clad plan for raising money. And…

The number one reason Li’l Kenny Johnson is a flaming idiot:

He airs his “dirty laundry” on Facebook yet expects to use that same Facebook page to market his phony “community.”

Frankly, we couldn’t have asked for a more congenial adversary. Thanks, Li’l Kenny. We’ll miss you when go up the river.

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Note: We originally wrote this post on May 1 2014. We are pretty sure that Li’l Kenny is yet again living in rank squalor, shivering in the dark because he hasn’t paid the utilities. And the orchards haven’t been irrigated in months. Just a guess, mind, but an educated one. 😉

Rio Colorado: The Con Man Got Conned

“I received the update Cathy Cuthbert sent out a couple days ago showing a preliminary contract between Ken and Mario Del Real for a company named “RIO COLORADO MINING AND EXPLORATION INVESTMENT COMPANY S.A.” This contract was never finalized but what’s important is it was to be a private agreement between Ken Johnson and Mario Del Rio. In my mind this is like looking at Ken’s dental records – perhaps mildly interesting but none of our business. As majority owner of Inmobiliaria Galt’s Gulch S.A. Ken has every right to sell his shares to anyone at any time for any purpose.” –GGC Investor Jerry Folta, in an email to GGC investors, November 2014.


The swindler was swindled; the scammer, scammed. GGC’s estafador had his stash filched. A sleazier sleaze bag absquatulated with a millJohnson empty balloon rightion bucks, all the shares, and the office furniture, too. Are we to be spared nothing?

Oh, the humanity!

Mario Del Real is a Chilean businessman (some say loan shark) brought into GGC by Johnson as a “fixer.” When their relationship began, Johnson’s bank account had been blocked due to non-compliance with the know-your-customer regulations. He needed a way for GGC to receive funds from investors and Del Real agreed to let him use his daughter’s personal bank account for that purpose.

Del Real convinced Johnson that he had gotten poor advice from his lawyers and that he could help him with various legal documents and with obtaining subdivision permits. He further advised Johnson to put himself and his children on the board of directors and to give the position of general manager to Del Real’s daughter, Pamela. John­son then sold 30% of GGC shares to the Del Reals and later increased their ownership to 50%. This second sale was for peanuts–$1.82/share making the IGG total valuation $18,000.

Ironically, the equity investors had been agitating for months for Johnson to fill the board of directors with investor representa­tives and to give them the equity in the project that he was con­tractually obligated to give them. What he denied his investors, Johnson gave to this Chilean crook.

The big heist occurred when Del Real sucked Johnson into a trap with his own company, Rio Colorado. This company owns a prop­erty called Los Andes, supposedly valued at $16 million being blessed with glacial waters for which nearby mining concerns would gladly pay millions of dollars per month, or so the story went.


Andean glacier, chile


At first, Johnson agreed to buy 51% of Rio Colorado for $8 million dollars; $8 million of which he did not have. (See here for Spanish, and here for English.)The money was to come from Rio Colorado water revenue. When that looked like it wasn’t going to happen, Johnson claims he cleverly proposed a stock swap between himself and Del Real—51% Rio Colorado for 50% GGC. (Chirgwin investigated the swap and provided the GGC Recovery Team this report.)


“[B]asically my first deal with Mario was for eight million cash, you know, eight million and some change. We were having dinner one night and I said, ‘You know Mario, I’m just going to pay you out of the water revenue. You know, you’re helping, you’re doing a lot of work for Galt’s Gulch and you’re helping out a lot. We can renegotiate the dollar amount and you can take the equal amount of shares I have in Galt’s Gulch,’ and that’s how it came about.” –Ken Johnson, June 29  2014, reminiscing over his dental records.kj contract


Of course, Johnson’s 100% ownership of GGC was fraudulent. He had a partner in Jeff Berwick and four equity investors who together should have had approximately 62% of the IGG, and Ramirez was given another 3%. No matter, Johnson signed the swap agreement that he didn’t understand since he hadn’t consulted his own legal adviser and cannot read Spanish. In addition, he convinced three GGC investors to pony up $100,000 each for their share of this sure thing.

We still don’t know exactly how much money changed hands along with the stock swap. We were told by two Chileans that at the signing of the swap agreement on April 15 2014, a backpack of $350,000 in cash was delivered, and that a second delivery of $250,000 in cash was made shortly thereafter. Further, Johnson was caught on a recording saying that he paid Del Real “about half a million bucks or whatever that total is.”

Let’s put this information into perspective with the GGC timeline, shall we? April 15 2014… Hmmm… Now, why does that date sound familiar?

Oh yes, that was right around the time Johnson was supposed to make the final $2 million payment to Ramirez for the Lepe purchase. Instead, he extended the final payment to Aug 15 2014, paid or accrued (we don’t know which) another late penalty to add to the over $1 million in fines he had already paid, and pulled off a killer deal for a mere $500,000–or $600,000 or whatever that total was–for a “shit load of value” in Andean water.

Those GGC investors bamboozled by Johnson to “invest” in Del Real’s pipe dream contributed $300,000. So where did the second KJ handcuffs$300,000 in cash come from? Likely it came from the same place that all of Johnson’s money came from since November 2012–us investors, from GGC, from the final land payment.

We know from our wire receipts that approximately $1,000,000 went into Pamela Del Real’s bank account and where it went after that, we don’t know. We have heard that former developer Johnson said on several occasions that the MDR handcuffsDel Reals stole it, or some portion. Further, we have documents showing that $120,000 was diverted from two GGC investors through Pamela Del Real’s checking account to Rio Colorado, authorized by Pamela’s signature. (One of these investors filed a criminal suit against Del Real in Chile on May 20 2015 for that theft.)

To add to the miasma of deceit, we’ve been told by a reliable source that Mario Del Real claims he received only $140,000 from former developer Johnson for Rio Colorado. But wait! in the farm office, the GGC Recovery Team found a piece of paper that appears to be Del Real’s accounting of former developer Johnson’s cash payments to him for those very valuable Rio Colorado shares. There were six payments totaling nearly US$280,000 en efectivo—that’s español for cold, hard cash. Del Real also claims he has documentation showing that he loaned CLP$35,000,000 (US$65,000) back to GGC.

According to Johnson, once the Del Reals were in place as the management of GGC and the GGC/Rio Colorado contracts were signed, Del Real blocked Johnson from fulfilling the contract requirements.


“[Del Real] interlocked the contracts which I told him I didn’t want to do, but he did, and basically the payments on Rio Colorado include the share issuance to him of 350,000 shares of Galt’s Gulch Chile, of Inmobiliaria, which equates to 35% of the company. And that’s fine, that’s what we agreed to, but I can’t make that issuance because his daughter and him (sic) are refusing to put the shares into my name like we agreed, because that’s not in the contract. So he’s basically trying to hold me hostage.” –Ken Johnson, June 29  2014. Uh, oh. Looks like a cavity in the #2 molar.


However, according to Del Real by way of lawyer Chirgwin, Johnson missed a $206,000 payment, and also breached an obligation to deliver bank bonds, both part of the swap agreement. Because of this non-payment, Del Real refused to complete the transfer of the shares to Johnson.

For whatever reason, as is stands now, the Del Real family is listed as the owner of record of 99+% of GGC, Del Real is the Chairman of the Board with his children as fellow Board members, his daughter, Pamela, is general manag­er and Johnson is out of luck, as are the GGC investors.

Johnson claims that all the documents giving ownership and control of GGC to the Del Reals are either forged or tampered with in some way, but his explanations are vague. We suspect that in many if not all cases, there is another explanation.


“What the fuck are you talking about, dude? You’re the one who drafted kj no hablothese agreements, I didn’t even… I hardly know what they fuckin’ say, for Christ’s sake.”

“Hey, your attorney, this is what they represented to me: I signed the contract, taking them on their word, I don’t know what the fuck I signed ’cause it’s in Spanish.”

–Ken Johnson, June 2014, recounting his conversation with Del Real about the Rio Colorado contracts. Root canal coming right up.


As we’ve said before, Johnson did not seek competent legal advice y no habla Español. Qué lástima. Qué horror. KOed.

The details of what really happened, we don’t know. How much money changed hands when? We’ve seen no evidence and likely there isn’t any. That’s what paying with large quan­tities of cash without receipts gets you. Don’t think that Del Real isn’t fully aware of this. What we do know is that three investors paid $100,000 each, two others had $120,000 diverted and none of them has anything to show for it–Johnson’s leitmotif. Where is the money? With Del Real? With Johnson? ¿Quien sabe?

By June 2014, Johnson was once again in danger of his fraud being exposed. In his panic he turned to investor Josh Kirley to bail him out, asking him to pay $1 million to become the proud owner of Rio Colorado shares–a payoff to Del Real to give over ownership and control of GGC. Josh wisely refused, then went public with Johnson’s perfidy.

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Oh, by the way, you might notice that if Johnson hadn’t brilliantly negotiated crippling late penalties that ended up costing over $1 million and hadn’t cleverly given the Del Reals access to $1 million of investor funds, he would have had $2 million for the final land payment. But, then, he wouldn’t have had nearly as much high rollin’ fun along the way. 😉

Final interesting note: Pamela Del Real is only 26 years old. Quite a tender age to be the General Manager of a multi-million dollar real estate development, and convicted of embezzlement, ain’t it?

We Should Change the Name to No-Contracts-ville Chile

“It’s my dream to not have contracts in Galt’s Gulch, and to share a common bond of truth and integrity… and vision.”
–Ken Johnson


There were five types of contracts Kenneth Dale Johnson used to accept funds for GGC:

  1.  Heads of Agreement (HOA) (click here) for equity positions and residential lots to the first four investors referred to as “The Founder.”
  2. Promise to Purchase a residential lot coupled with a loan for investors called “The Second Round Founders.” (Click here.)devil contract
  3. Promise to Purchase a pre-sale lot (click here). The term “pre-sale” was used to imply special pricing because subdivision approvals had not yet been obtained.
  4. Farm Share Subscriptions, the sale of shares of Agricola y Comerical GG SpA and loans to Agricola for land purchase and improvements (click here). Some also include options on residential lots. Fifty hectares were to be transferred from Inmobiliaria to Agricola after subdivision of the orchards. These investors would own this 50 hectare farm through owning the shares and would be paid the profits of the farm through dividends.
  5. Promise to Purchase an Orchard (click here). These are five 10 hectare lots planted in lemon trees that were also to be subdivided from the agricultural zone.

The Heads of Agreement was new to us. According to Wikipedia, “A heads of agreement is a non-binding document outlining the main issues relevant to a tentative (partnership or other) agreement. A heads of agreement document will only be enforceable when it is adopted into a parent contract and subsequently agreed upon. Until that point, a heads of agreement will not be legally binding (See Fletcher Challenge Energy v Electricity Corporation of New Zealand [2002]2 NZLR 433).” This type of document may have been used because the corporate structure was not complete. The HOAs were supposed to be followed by a “comprehensive partnership deed.” This never materialized.

The “promise to purchase,” in Spanish “promesa,” is a preparatory contract by which two or more parties agree to enter into a future contract on a specified date and/or subject to the occurrence of an event. In this case, the future event that conditioned the execution of the promised contracts—a sales contract for a lot—was the subdivision approval of the land, the farm named Lepe/Las Casas.

Within these types of contracts, there are various versions. We stopped counting at 15. Our speculation about why there were so many versions of the contracts is that with time and feedback, Johnson was learning that his contracts were problematic, causing him to continually fiddle with the provisions.

One change is that later promesas had a provision saying the contracts are conditioned on “the smaller 10 hectare parcels legally exist[ing], through the approval of the subdivision…” (We wonder if this is an error. Johnson may have meant to say lots smaller than 10 hectares.) Early promesas don’t stipulate the size of lots that must be approved. The change may have been due to the difficulties Johnson was having in obtaining subdivision approval.

There are problems with most of the contracts, either in the provisions, or with how they were executed, or more precisely, not executed. Out of 73 investors, maybe 62 have these problems. The GGC Recovery Team attorney in Chile said that the vast majority of the ones he has seen are flawed.

Jurisdiction—Just Try to Get Your Money Back

Possibly the most significant problem is the jurisdiction issue with all contracts signed before October 2013. The HOAs claim the jurisdiction of London, UK. The remaining contracts claim the jurisdiction of New Zealand.

ukThe HOA investors bound by London jurisdiction paid their funds to the Bank of New Zealand account of attorney Greg Stewart, who forwarded those funds to Banco Itaú in Chile. There are no assets in London. The claimed connection to London is unclear.

Most of the other investors bound by New Zealand jurisdiction paid their funds to Banco Itaú in Santiago. There are no assets in New Zealand, nor were there any during the time that the majority of these contracts were written, although it appears that two residential lot option buyers sent their funds to New Zealand, similar to the equity investors.

The ostensible reason for the New Zealand connection—a corporatenew zealand structure of a limited partnership that would act as trustee of a trust that would own the Chilean entities—was tax efficiency. However, the documents for this structure were not completed. The New Zealand lawyer who began the process of structuring these entities repeatedly wrote to Johnson to warn him that double taxation may apply because the documentation was not complete.

If tax efficiency weren’t that important to Johnson, could the confusion of multiple jurisdictions have been his aim? Say one of the equity investors sues and receives some kind of judgment against GGC in London, there are no assets in London to attach. Or should he go after the Bank of New Zealand account for satisfaction? But it’s owned by someone else and has no GGC funds. If he tries to sue in Chile, the judgment could be enforced provided that exequatur requirements found in both international legislation (New York Convention on the Enforcement of Arbitral Awards) and local rules are met, and provided that the defendant entity is the same entity that took part in the foreign arbitral proceedings. In some of the cases, this is legally impossible; in others, the costs involved in the different stages of the process are prohibitive.

On June 16 2014, Johnson wrote to an investor regarding refund requests:

“The contracts are private offshore agreements, so there is no tie to Inmobiliaria GGSA on most of them. It says they can ask for a refund after map approvals if they don’t find a lot they like.”

This quotation shows that Johnson purposely structured the contracts to severely limit the potential for refunds or lawsuits.

Are these contracts legal? Our attorney has informed us that despite the declared jurisdiction, since the GGC real estate is located in Chile, the promesas on lots must follow Chilean law. With only two exceptions, none of the promesas do.

Requirements for Valid Contracts in Chile

To be valid in Chile, the contracts can be in any language. Those that ultimately convey property titles under the urbanism law, such as the residential lots, require the signatures to be notarized. If the signatures are notarized outside of Chile, further legalization by a Chilean consulate is required. (Chile is not a signatory to the Apostille treaty.) Only the original documents can pass through this process, not electronic scans. The documents must be filed in the register of public records of a Chilean Notary.

Further, because GGC was selling lots before subdivision approval, a bond or insurance was required to protect the buyers. Johnson did not post bond, nor did he buy insurance.

The Agricola Share purchase agreements need not be notarized, but any associated residential lot promesas are different matter. They must follow the same rules as the other residential promesas.

There are many contracts that bear a notary stamp dated on the kj contractsame day— June 16 2014— and as “a true copy,” even though these contracts were signed during the eleven and a half month period, from June 16 2013 to May 30 2014. This stamp does not make real estate promesas legal in Chile.

You might wonder why this notarization happened. Why would contracts signed on all different dates, from June 16 2013 to May 30 2014, be brought to a notary on the same day, June 16 2014, copied and stamped when this is a meaningless exercise in terms of the legal requirement?

We speculate that Johnson finally realized that virtually none of the contracts were properly executed. Indeed, in a conversation he had with one of the investors, Johnson admitted that all the contracts that weren’t notarized were invalid.

“I have copies of all of them [the contracts] that I got notarized, you know legalized, just so there’s some merit to them, you know, for the people who haven’t, who haven’t met me at a notary or sent a power of attorney and that kind of stuff, right?” [Emphasis added.]

Despite what Johnson said, it’s doubtful that the purposed of this exercise was to help the hapless investors who didn’t have legal contracts. We speculate that as a CYA maneuver, he gathered the contracts—including some share subscription agreements that didn’t need to be notarized—went to his friendly, neighborhood, crooked notary and asked what to do. The guy said he’d stamp them as true copies. Stupid gringos will think it looks official, and they don’t read Spanish anyway, so they’ll be none the wiser. If that’s what he said, then he was correct.

crooked notary stamps

This is the crooked notary’s stamp. The round stamp was put towards the bottom of each page and the rectangular one was put on the last page. It says, “I certify that this resulting photocopy consisting of four pages conforms to the original.”

across staple notary stamp

This is a legitimate notary stamp, placed on two sheets across the staple to prevent the pages from being separated and possibly substituted.  Below is the stamp this notary used for the signatures.

Real notary stamp

Note the ID numbers and finger prints. In this case, a lawyer with a power of attorney signed for the buyer.

Ponzi Contracts

Perusing the “Second Round Founders” contracts, you’ll find unusual features. The investment is a non-interest bearing loan that is to be paid back 100% in three years, with title to a residential lot also to be transferred to the investor by the end of year three. Zero interest loans can be found when a developer is trying to push sales, but usually the situation is the other way around, that is, the developer offers zero percent financing to the buyer. It may be possible that the residential lot represents interest paid on the loan to the investor, although the contract does not say that.

Be that as it may, this is an aggressive loan schedule, especially handshakeconsidering that Johnson committed to delivering developed lots, yet did not have subdivision approval, had no real estate development experience and knew virtually nothing about Chile, not even the language.

The second founders round loans, including the orchards, totaled $4.6 million and were ostensibly for subdivision approvals and infrastructure, yet those funds were used to make the payments on the prodigiously priced land that Johnson represented GGC already owned free and clear. How was he to begin repaying the loans, as required by the end of year one, other than by bringing in new investors?

Another little twist to the second founders round “investment” is that even though the contract says that the loan is being made to a New Zealand entity, the payment was made to the Asesorias y Servicios Galt’s Gulch SA bank account in Chile.

As an interesting aside, Johnson insists that the second founders round investors are neither investors nor creditors. He refers to them as “clients.” We can think of a couple of reasons why. If they are investors, the SEC would probably love to be sniffing around for a prospectus, of which there is none. Or maybe Johnson wants to make very sure that these “clients” don’t get the uppity idea that they have any claim on GGC’s entities.

Shares of a Whole Lot of Nothin’

Johnson incorporated a company for the farm operation. The shares of Agricola y Comercial SpA were supposed to represent an ownership stake in an organic farm operation, both a piece of the action on lemon harvestexisting lemon and avocado orchards and the profits from a long list other fruit and row crops. The real estate holding company, Inmobiliaria Galt’s Gulch SA, has an area of 100 hectares much of which is a lemon orchard. Johnson planned to subdivide this area into five 10 hectareorchard lots and one 50 hectare lot. The five smaller lots would be sold to individual investors to be managed by GGC. The 50 hectare lot would be sold to Agricola and be owned by the shareholders.

It seems that Johnson never got around to subdividing the orchard, even though he somehow did get around to selling the orchard lots that didn’t exist. Maybe he was too busy trading for Andean water scams or stealing money for wildly profitable bitcoin investments. It could have been that his architects and engineers were exactly as he describes them—crooked and/or incompetent. That has yet to be determined.

What we do know is that subdividing the orchard is a rather straight forward process. Since the purpose of the land would be the same, the subdivision was granted as a matter of right. Once Johnson finally applied for the subdivision in September 2014, it cost approximately $5,000 and took a couple of weeks. Johnson should have had subdivision approval before selling share subscriptions and orchard lots.

Johnson’s sales team was able to sell only 30% of Agricola shares. Many investors who wanted to buy shares were advised against doing so by their attorneys and financial advisors who rightly cautioned against buying shares of nothing. As it was, he finally got around to subdividing the orchard as a public relations gesture after the investors disclosed his malfeasance in various internet articles,  but he never transferred title of the orchard to Agricola. It’s still a shell company.

The brochure for the Agricola farm share program is a true marketing tour de force. (See for yourself here.) We hesitate to call it a prospectus, although Johnson called it that, since is it nothing lemon bins 2like any prospectus we’ve ever seen. No cautionary boiler plate, no warnings about how you could lose everything are included with the blue sky. We are assured that the farm is organic, even though in the next sentence we are told that it’s not, and that there’s a fantastic amount of water, even though most of the avocado trees are dead and the survivors are not producing due to water stress. We’re left with the impression that farming is really very easy in the can’t miss Mediterranean climate of central Chile. And hoo-wee! Look at all dem profits:

Year        Net Profit
2014       $582,888
2015       $1,243,181
2016       $1,262,923
2017       $2,660,387
2018       $3,091,672
2019       $3,523,871
2020       $4,016,738

The reality is quite different. One of the first things the employees told the investors when they took over the farm is that it is not profitable. The lemon harvest for 2013 was about 3 tons per hectare versus 30 tons per hectare for a healthy orchard. There were sections of the orchard that hadn’t been pruned in five years by the previous owner. There are mineral deficiencies in the soil. The irrigation system is aging and in need of an upgrade. The projections above are simply impossible. It will take time and money for the orchard to recover, even with million dollar improvements. However, there was no money for improvements. The $2.779 million taken in as loans for the farm were used to buy the Lepe/Las Casas property, or stolen by the Del Real family.

Five Star Guest Accommodations

Never fear, lucky Agricola shareholders. Even if the farm can’t make money, steady passive income could still be yours. Johnson planned to rent rooms in the main residence, the hacienda he referred to as the club house, and in the guest cabaña he referred to as a hacienda. From the marketing materials:

“The rooms in the Inn at Galt’s Gulch and the freestanding Guest Hacienda are projected to rent for $150-200 USD per night, with occupancy levels at 50% in 2014, increasing to an average of 75% occupancy thereafter. These units are projected to be in very high demand. They will have road access, 220 volt power, hot and cold running water, Internet access, television, full maid service, room service and amenities typical for upscale hotels, while allowing those staying there to experience all of the beauty of living at GGC.”


 

renovations on cabana 2

Cabaña being renovated for the fall celebration. Johnson told the contractor to paint over any problems, but the contractor had too much integrity to do so. These cabañas are small, two room buildings, little more than a bedroom and sitting room, situated in the middle of the orchard and hardly on the level of upscale hotels, as advertised.


This guest stay operation was to net $180,000 in 2014 and with profits climbing to $297,674 (and no pennies) in 2015. You might ask what profit Johnson achieved in the first 10 months of 2014. Or, having read this far, you might not need to ask.

To round out this sure thing, passive income operation, GGC would launch its own brand of organic produce that would become renowned the world over. Johnson filled pages 13 to 28 of the brochure with tables of fruits and vegetables projecting the many millions in profits that would fuel investor dividends.

Johnson’s first foray into row crops was initiated just in time for the April 2014 celebration—a marketing event at the farm—when he had a field of about three acres planted. The Potemkin Village plot impressed some of the investors, as did the half-completed renovations for the Inn at Galt’s Gulch. Alas, the field was left to be eaten by the birds and no first harvest for Galt’s Gulch Organics was produced.

As expected, the Inn’s renovations weren’t completed, either.

No-Contracts-ville

In summary, the investors in GGC either hold unenforceable contracts because they were not properly legalized according to Chilean law, or they hold legal contracts that give them the rights to nothing.

One might say that the lesson of GGC is that investors should always hire local attorneys to be advised on how to enter into sound, legal contracts, and that’s certainly true. Yet some GGC investors did just that, and still have nothing to show for their trouble.

The most important lesson of GGC is that contracts are not self-enforcing, particularly not invalid ones. Because of this, the level of due diligence required to enter into an investment with an unknown developer in a foreign land is orders of magnitude greater than what we GGC investors did.

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Why did GGC fail so spectacularly, so fast?

“The project was brought to a standstill in April of last year [2014], with an orchestrated chain of refund requests. This orchestration involved Jeff Berwick, Chris Serin, Wendy McElroy (she was duped, in my estimation), Josh Kirley and a handful of former staff, whom (sic) are seeking a stake in GGC, even though they did nothing but loot it.”
–Ken Johnson, comment section, Panampost.com.


Johnson and GGC must have achieved a record for the quickest johnson empty balloon 2failure of an affinity scam/Ponzi scheme in the history of financial crime. There are two reasons for this: 1. the abject incompetence of future convicted felon Johnson and 2. the integrity of Josh Kirley.

But first, we can’t stress enough the revulsion we feel reading Johnson’s attacks on his former employees. It is demonstrably ridiculous to think that they “looted” GGC. For one thing, only someone with access to the bank account could have done that and the employees did not have access. Further, the people to whom he refers were collectively gypped out of over $63,000. They are not seeking a stake in GGC. They are helping the investors because they feel obligated to us for being unwittingly used to steal from us. It’s their way of making amends.

The Abject Incompetence of Ken Johnson

It’s obvious that when running an affinity scam/Ponzi scheme, the optimal strategy is to structure it to run as long as possible. You want to put off that day of reckoning when the last sucker has put in that last dime and the jig is up. You also want to put away some bucks for your get away. You need to get out while the getting is good, never to return.

Johnson did none of that. His star may have burned out quickly, but it certainly did not burn brightly.

The contention that refund requests were orchestrated and “brought GGC to a standstill” in April of 2014 is false. The Recovery Team got the refund request list by polling the investors themselves, and at that time the dollar amount was insignificant. Besides, he only honored three requests: two in full on Sept 10 2013 and Nov 25 2013 and one in part in Aug 2013, all well before April 2014. How could refunds have caused problems when he didn’t pay up?

Here’s why Johnson quickly ran out of money, having nothing to do with The Recovery Team or refund requests or employees.

1. He paid too much for the real estate. Because the first property he bought was unsuitable for development, to keep the scam going he had to buy a second property. That property was just too expensive, and we believe he overpaid, as well. After paying for the real estate and pissing away the rest on lawyers, two residences, expensive restaurants, booze, and gambling, there was little left to build anything.

2. Simple financial mismanagement. He did not have anywhere near the funds to pay the $6.8 million purchase price for the second property, the agreement for which included crippling late penalties. Immediately after the closing on the property, he was unable to meet the aggressive eight month payment schedule. He incurred over $1 million in late fees in the last four months of 2013 alone.

3. He cheated his partner. Because he made these unsound land purchases, and because he defrauded Jeff Berwick of his 50% ownership of GGC, Jeff stopped marketing the project. Probably all GGC sales leads were generated through The Dollar Vigilante. This was an affinity scam after all, and Johnson was an unknown. He relied on Berwick’s libertarian readership for victims. That pipeline dried up in early 2014. Take a look. Johnson’s lie couldn’t be more obvious–income collapsed months before April 2014 even if there were an “orchestrated chain of refunds,” which there wasn’t.

GGC Investors Cash InflowClick on chart to enlarge.

4. The con man was swindled. The GGC bank account was blocked in January 2014 for suspicious activity leaving the project without a way to accept investor funds. Johnson arranged with Chilean swindler, Mario Del Real, to use his daughter’s bank account for GGC business. The Del Reals, very predictably, proceeded to swipe the majority of the $1 million that went into that account.

5. More financial mismanagement. The GGC loans had a short payback period of just three years, with the initial 25% payment due on the loan’s first year anniversary. Johnson had no sinking fund for the loan payments and no bond or insurance for refunds, which is a felony in Chile. Loan payments began coming due in June 2014. That was the coup de grace for his fraud.

The Integrity of Josh Kirley

Josh is a major investor in GGC. When he began to realize that there were significant problems, rather than hope them away, he investigated and found the unpleasant truth. In mid-2014, Johnson was going to make another push for investor financing that could have been the source of Josh’s refund. Refusing to prey on new, unsuspecting victims to make himself whole and with the help of a second investor who has since passed away, Josh found and organized other GGC investors and blew the whistle. He has suffered slander and liable from  future convicted felon Johnson–and occasionally from Jerry Folta, we might add–ever since.

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Josh Kirley. Fighting for truth, justice and the libertarian way.

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The Dog Lover Who Kills Puppies

The following is an excerpt from Terence Gillespie’s book, The Creature from Galt’s Gulch Chile. Go to his website, McGillespie.com, to download your copy.


Introduction

All You Need to Know about Galt’s Gulch Chile

My flight landed a day late, Wednesday November 5 at 2:00 am Santiago time. I don’t know how they knew me because we had never met, but Kenny Carpenter, the most successful salesman for Galt’s Gulch Chile (GGC), and E.J. Lashlee, an adviser to several GGC investors, waved to me as I exited la aduana. We found a place to sit in the all night coffee shop upstairs and talked for three hours as they filled me in on the events of the prior few days.

I had flown to Chile to oversee the next phase of Galt’s Gulch Chile. We investors had been demanding that the developer, Kenneth Dale Johnson, resign. After months of his insistence that he wanted out yet refusal to get out, investor Tom Baker and E.J. went to the property to help him speed up his time table. They were successful, at least to a point.

E.J. caught a flight home while Kenny and I made our way to the ggc peacockGGC farm, outside the small town of Curacaví, an hour’s drive from Santiago. We entered the gate just as the sun was rising over the mountains surrounding our little valley. I spied peacocks in the front lawn strutting for their mates, as three utterly emaciated dogs with barely the energy to wag their tails crawled up to the car to meet us. Kenny told me they had been abandoned on the property. I was too tired to care and went straight to bed.

Several days later, I learned that these emaciated dogs were what was left of a litter of five pups abandoned several weeks prior to our take over. Maybe the owners had heard that Johnson was a great dog lover and was running a sanctuary, or so he said. Or maybe they were left there because that’s what happens in the country. They were in good health when given over to Johnson’s tender mercies. He proceeded to let them slowly starve, while he pampered his own dog with salmon dinner every night. We found the rotting bodies of the other two puppies in the orchard.


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One of the survivors from the starved litter. This female needed over $100 of veterinary attention and medication. She barely survived Johnson the first time, we wonder if she’ll survive him the second.


That was my welcome to Johnson’s world. It’s a world of half renovated buildings, unkempt gardens, filthy living quarters, unpaid employees, stiffed shopkeepers and dead puppies. He’s a helluva salesman, but he delivers broken promises and shattered dreams. Lies and deceit are his stock in trade.

The dream he sold us was Galt’s Gulch Chile, a proposed residential community to be built near Curacaví, equidistant between Santiago and the Pacific.The original principals were John Cobin, Germán Eyzaguirre, Jeff Berwick, and Ken Johnson. However, through a series of broken promises, broken contracts, and fraudulent maneuvers, Johnson gained 100% ownership and control of the project.

Cover_GGC (2)Johnson proceeded to develop not a community, but an affinity scam aimed at Western libertarians. He employed deceptive selling practices, violations of Chilean and US law, multiple bank accounts, and multiple jurisdictions to defraud his investors of US$10.45 million. He enriched himself by using investor money to fund his lifestyle.

In April 2014, Johnson was himself defrauded by a Chilean con artist named Mario Del Real, who took ownership and control of the real-estate holding company for GGC. Also, due to his mismanagement and fraudulent dealings, the flow of investor funds into the project collapsed, making it impossible for him to pay the final installment for the parcel which was to be the main building site.

On October 24, 2014, Tom and E.J. went to the GGC farm to have talks with Johnson. They hoped to convince him to leave the premises and turn the project over to an investor group. Johnson was not present when they arrived. They were let in by the night watchman who then called Johnson.

Arriving some time later, Johnson sent his thuggish lackey, Ian Thornton, to physically assault E.J. Thornton’s attack was easily turned aside with no injuries. During these events, Johnson was where he should be now and forever–cowering in the bushes. He then abandoned the property to the investors who, from late October 2014 to April 20, 2015, maintained the farm.

On April 21, 2015, Johnson sent four thugs to terrorize the employees at gun point in his cowardly take back of the farm. He is now squatting there, spending his time writing libelous reports about the investors and former employees, taunting and threatening them with legal action and making aimless videos of the GGC hacienda. He claims to be moving ahead with plans to develop the community. I don’t know anyone who believes him.

The only positive attribute I can determine about Johnson is that he is clever. He peppers his false statements with elements of truth to confuse people. Since the GGC situation is rather complex and he has hidden many details, even some of the investors are confused.

All you need to know about GGC to sort out the good guys from the bad guy is that $10.45 million was sent to Johnson for developing a project, yet we have nothing to show for it. At the time of this writing, October 2015, the investors do not have title to the residential lots, orchards, or shares of Agricola GGC, the farm operating company, for which they paid and that Johnson agreed to deliver. Loan payments to GGC investors have also not been paid. In addition, the titles to two GGC companies and the two parcels that were to become GGC are clouded. The project is insolvent.

A real estate agent in Chile told us, “I could have developed two communities with that kind of money.”

Even though this really is all you need to know, we’ve written this book to cut through the miasma of deception draped over the GGC project, as Johnson desperately tried to obscure his utter Batman_Villainsmismanagement and compounding fraud. It may be surprising that this is not simply a story of a gringo cheating other gringos set in Latin America. It’s a story reminiscent of a Batman comic book, with multiple Chilean villains joining Johnson in his plot against the investors to steal their money, including an out of office politician, a retired, conniving businessman, a loan shark, crooked notaries, and incompetent lawyers. At times it seems to us investors that swindling Americans is the Chilean national sport. We hope that this book will prove useful to investigators, journalists, expats and expat wannabes who are sure to need a guide.

While the GGC story is still unfolding in the courts of Chile and the United States, the one thing of which we feel most certain is that the final chapter will take place in the slammer for Kenneth Dale Johnson.

Cathy Cuthbert, GGC Recovery Team
San Luis Obispo CA

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More on the Joys of Working in Sales under Ken Johnson

This is a comment posted on Jeff Berwick’s Facebook page from a former GGC employee.

Imagine if you will, you have a client coming in to see the property, you have spent much time building relationships with them. They are traveling from the other side if the world. You meet them at their hotel and have an appointment to see the land where your boss, lets call him Ken doll, has agreed the night before and an earlier text message to meet you there at 11. You drive an hour and a half to get there with your clients where you sit outside locked gates because this control freak boss makes excuses not to make copies of keys because he is insanely paranoid and wants all actions, all work, everything to depend solely on him.

Imagine you sit there for three hours, no gas stations near by, no restaurants, no restrooms, no cell phone reception. In the hot sun. Finally he shows up 3 hours late with some stranger in the car, laughing and joking at a leisurely pace…

He pulls up beside where you are sitting on the side of the road.. Says hey what’s going on.. You express that we had an 11 o’clock appointment and he shrugs and says I got caught up in blah blah..

He then says I got room for two in my jeep, your clients get in his dog hair infested disgusting jeep and he leaves you on the side of the road for another two hours doing a half ass tour.. Completely inconsiderate of the fact that they are starving and thirsty.

Imagine if after he simply drops them back off. And rolls out again leaving you to do great damage control inflicted by him. All the time building relationships thrown out the window as they are super pissed at the disrespect..

What you have imagined has happened on multiple occasions in dealing w ken doll. (Like 3 hours late almost every single day) Keep in mind this was before the clubhouse became a work area, or had Internet) Now imagine if the next day is pay day and he says I will meet you at the clubhouse, he has “plenty if money” he showed off his big wad as he went to the casino. So you are sure this time he will pay you. you drive an hour and a half to meet him. Two hours later you drive back to town to get cell phone reception to see why he hasn’t showed.

He says “yeah I’ve been super swamped, I’m dealing with blah blah blah” completely inconsiderate to the time you could have spent working on the project. Or anything productive.

So you say ok I will meet your at the beach house tomorrow. Can I count on you, he says yeah man. The next day you drive 3 hours to the beach house. You go in and sit on the sofa as he goes through 6 phone calls and never even acknowledges you exist. An hour and a half later of not wanting to interrupt, you finally walk into his bedroom where he is answering an email and say. “Ken doll, what gives?” He says “what’s up?” I say we were supposed to meet. He says for what.. You say, to get paid.. He says for what? For my fucking work dude.. For the videos I created you troll faced fucktard.

He begins questioning you as if you are trying to get over on him and you present a calendar you have created to detail every day what you have accomplished. He looks it over and says, sorry dude, I had to pay out a bunch of people. I don’t have any money.

His phone rings, he holds up his finger answers it. And leaves you standing dumbfounded on such an asinine amount of inconsideration. He doesn’t bother finishing up your conversation as he gets up and walks out on the phone the whole time. Saying to the caller “well I don’t know what your deal is man, we are all over here working, I don’t know what you’re doing.” He does this to team members who come from professional and entrepreneurial backgrounds. If you are not in his direct eyesight he does not believe you are working.

This is but a snapshot of every single day working for Ken Johnson. This actually happened to me. Its a forced bottleneck under his control, every waking hour, insanely paranoid, incompetent business decision after decision. Infested with Little man syndrome. It’s enough to make you seriously question the value of NAP [non aggression principle–Ed.]. So why would you stay more than a week? Because you believe so much in the message of liberty that you feel it will work in spite of him. After a while [you] begin questioning your own sanity. Like why the fuck is no one else saying shit? It was a fascinating thing to watch unfold, but words can’t describe the frustration. Does it sound like freedom?

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As you see, the affinity scam worked on the employees, as well, since most of them were libertarians drawn to the message, just as we investors were.

The Cantwell Interview: Johnson Cornered

“If someone lies to me once, I’m done with them because if they lie to you about one thing, they’ll lie to you about hundreds of things or thousands of things.”
–Congenital Liar Ken Johnson on the Radical Agenda podcast with Christopher Cantwell


Here’s the podcast link where Christopher Cantwell interviews future convicted felon Ken Johnson, a must-listen for all GGC aficionados:

Radical Agenda EP032 – The Libertarian Bernie Madoff

Quick background. Even though the title “The Libertarian Bernie Madoff” applies more to Johnson than anyone, Cantwell had set his sights on harming Jeff Berwick due to some personal grudge or other. cantwell 2*Eye roll.* Johnson expected to have a high ol’ time with the both of them raking Berwick over the coals, but the interview quickly took a wrong turn for Johnson when he became the one in the hot seat.

Johnson had spread around a video of Berwick talking about a questionable passport program in Mexico that he was marketing. Johnson criticized Berwick for possibly not delivering on the passports and not refunding the money. Being a great humanitarian, Johnson claimed that he was worried about TDV Passport clients who may have gotten fraudulent passports that could land them in jail. How kind of Johnson to warn everyone.

We found out about the interview several days in advance and supplied Cantwell with some relevant information showing that not only had Johnson run an identical passport scam in Paraguay, he also didn’t get passports to some of his clients and didn’t refund their money.

Yes, we know you are shocked to hear this, but the flaming hypocrite of a scoundrel, Johnson, did the exact same thing in Paraguay. Some how we doubt he was crying any tears for the people he ripped off or put in harm’s way.

terence circleCantwell was a bulldog. He was joined by GGC investors’ friend Terence Gillespie calling in after about an hour. Together they didn’t let Johnson explain any of this away.

Cantwell then changed the topic to GGC. This was unfortunate because GGC is a much more complex situation and Cantwell wasn’t prepared. Most of Johnson’s lies went unchallenged. Nevertheless, the host and Terence did an excellent job of catching Johnson in three more whoppers.

1. Johnson acted as if it’s normal and above board that he ended up as the 99.9% owner of GGC. Johnson contributed not one thin dime while the investors paid in a total of $10.45 million, but he claims this situation is completely understandable. Clearly, he used fraud to obtain his 99.9% control of the GGC corporations, as Cantwell alluded. See our blog post, When Is a Partner not a Partner?

2. Johnson has been living off the investors for three years. He may johnson empty balloon 2or may not have received money from GGC Investor Jerry Folta last November–we have repeatedly requested proof of this with none forthcoming. Nevertheless, he is currently living rent free on a property that was bought with investor funds. He denied taking a salary, saying that he “took money against his salary” to obfuscate. By the way, the GGC Recovery Team has documented proof of Johnson’s hand in the till. See our blog post, “I never took a penny from GGC.”

3. Johnson said twice that The Recovery Team tried to stop him from talking publicly. Cantwell set the record straight, saying that we didn’t try to block his appearance on that podcast. Why would handcuffswe try to stop Johnson from talking? We gather important information for our criminal case every time he flaps his yap.

On his webpage, Christopher Cantwell says that he despises liars. Yet despite the four obvious lies that he expertly exposed, at the end of his podcast he said that he thought Johnson was not all bad. !?!

This inexplicable inconsistency aside, the interview was a big win for The GGC Recovery Team and GGC investors generally. Johnson’s dishonesty was laid bare for the world to see, and there were some excellent, on-the-record quotations for our upcoming criminal case.

Hey, Li’l Kenny, give some more interviews, please.

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By the way, Cantwell was a bit cranky that The Recovery Team didn’t call into the show. Well, we thought about it, but after doing some research on Cantwell, reading that his tag line is “Anarchist, Atheist, Asshole” with special emphasis on asshole, and noticing that he just loves to attack fellow libertarians, we decided to take a pass. Besides, Johnson was doing the heavy lifting for us all by himself.

(Cantwell has changed his tag line, but maybe not his personality.)

Water, Water Everywhere, Nor Any Drop to Drink

On Aug 28 2014, just a couple of days after the first internet articles appeared (see here, and here) marking the public beginning of Ken Johnson’s long, slow journey to his very own third world prison cell, a real estate agent in Chile began his blog post with these words:

“As I’m sure many of you know, for the past couple of years there’s been a lot of talk about a project aimed at American ‘libertarians’ on a property close to Santiago, in Curacaví. The name? Galt’s Gulch Chile, after Ayn Rand’s novel.

“When I first heard of this project, my initial reaction was, ‘Curacaví? Where on Earth are they planning to get the water rights for a project of this size? The valley is basically dry.’”


GGC lepe mountains

Dry summer mountains overlooking the Lepe lemon orchard.


And dry it is, although Johnson and Lepe’s former owner, Guillermo Ramirez, continue to dispute this assessment.

Whenever Johnson is asked to quantify the amount of water available for the GGC project, he responds that there are 420 liters per second (l/s) subterranean water rights from 53 wells (sometimes deep wells), and 216 l/s (sometimes 340, sometimes 360 l/s) surface water rights. He shares water quality reports from 2010. He claims that subterranean water rights in the area are selling for $20,000 per l/s (sometimes $25,000 per l/s), making GGC’s more valuable than the entire Lepe/Las Casas property based on the purchase price. He will assure you there is more than enough water for the residential area and 100 hectares of agricultural operations, allowing for the expansion of hectares under cultivation at the farm, with water rights left over to sell. Selling “excess” water rights is how Johnson proposes to raise capital to recover from his astoundingly feckless management of the project.

Note that he never answers the question.

For his part, Ramirez feigns astonishment at all the hubbub. “[It] is Ramirez circlehard to understand, that clever people participating on a winner project, knowing all the facts about it, and even more, having visited the site and saw it, with their own eyes are unable to discuss the best way to arrive at a happy end.”

But do we know all the facts about Lepe/Las Casas? We investors contend that we don’t–in no small part due to Ramirez’s misrepresentations–and that is the crux of this dispute.

Johnson did not perform adequate due diligence on the water resources before the August 13, 2013 closing on the property. That would be bad enough if he hadn’t been equally negligent with the first property he purchased less than a year before and that he abandoned due to lack of water. But of course, it gets worse because he was also well aware of legitimate concerns that Ramirez was making misrepresentations.

  • As early as July, two GGC sales people pointed out that owning water rights is not the same as having water.
  • Also at that time, Berwick’s advisor, Chris Serin, warned that the dead and dying avocado trees in the “orchard” were evidence that at least more due diligence was necessary. He recommended against the Lepe purchase. As an aside, Ramirez claimed that this orchard is water starved due to the 2010 earthquake. However, we have satellite evidence that the orchard was water stressed beginning in 2007. He probably stopped irrigation which could have been due to lack of water or possibly the cost and he then lied about it to Johnson and the investors.
  • By August 6, 2013, Johnson heard that a neighbor and life-long resident in the valley believed the available water was insufficient for the development.

Johnson’s response to these critical warnings was predictable to anyone familiar with his modus operandi. He dumped the sales people, stonewalled and demonized Serin, and demanded that GGC’s lawyer intimidate his neighbor. To this day, without testing to size the aquifer, he claims there is not only sufficient water, but excess water.

Johnson did pay for a hydrology study that apparently was delivered to him after he closed on the sale. Read it here. Here are the salient points:

  • “A maximum sustainable exploitation of 484.41 l/s, equivalent to 15,276,354 m3/year, has been estimated for this aquifer, which does not cause effects beyond the limits established for surface water courses. The committed demand (granted water rights) to June 30, 2010, was 35,512,119 m3/year [1,126 l/s], considerably higher than what was defined as sustainable.” In other words, there are more than twice the water rights than the amount of water that can be sustainably drawn, according to government estimates as of 2010. Note that Chile, like California, has been experiencing a multi-year drought since then.
  • “Ongoing exploitation of the project’s water rights is not sustainable according to the parameters of the DGA [Departamento General de Aqua]. The sustainable flow is most probably of the order of one third of the water rights legally granted.” That would make GGC’s share 140 l/s. However, how would a reduction in exploitation of the water rights be established or enforced?
  • “All the water rights reviewed have an associated collection point on site, which can apparently provide water. It is unknown whether all the collection points are capable of providing the flow granted by law.” That is, it’s not clear how much surface water is available. It could be less than the permitted 216 l/s (or 340, or 360).
  • “The use of the rights associated to the basin of the Puangue Stream, which most probably interfere with surface flows, could generate conflicts with users of surface water downstream. (In dry years the surface water could disappear and surface water users would then blame the underground water users located upstream).” Without careful management of resources, water wars are a possibility.
  • Three of the four wells tested have high coliform counts.
  • “The sale value of each liter/second of underground water in the basin is approximately UF 62 [or US $2,250].” Johnson is off by an order of magnitude on valuing the water rights.

Johnson did not reveal any of these findings to GGC investors. Indeed, despite this report, he continued to flog the avocado orchard in his marketing literature and presented plans for expanding into water-sucking row crops.

When the investors finally heard that there may not be sufficient lepe pondwater beneath Lepe, and shortly thereafter Johnson announced that he intended to sell “excess” water rights, their panic was palpable. Johnson proposed to use the water rights money for paying the final real estate payment plus late penalties, for pursuing subdivision approvals and for paying refunds. He claimed he could raise a cool $6 million. Recall that the purchase price for Lepe/Las Casas was $6.8 million.

Knowing that Johnson did not perform the required due diligence and calculating that water sales would not raise the necessary funds to pay off GGC’s prodigious debts, investor Josh Kirley moved to prevent Johnson from leaving the property dry and the project insolvent. He petitioned the courts to grant an injunction preventing water rights sales.

Johnson claims that the injunction is the reason the project is stalled, but this is hardly the case. To the contrary, it may be the single most important action in ultimately saving GGC, since it ensures that the water rights remain for the community’s use.

At the time of the injunction, Johnson had succeeded in alienating all but two very inexperienced sales people who lived at the hacienda kj duncelike indentured servants. He had little marketing reach having cheated Berwick out of his share of GGC. Sales were non-existent. He had fired his farm manager for refusing to be a yes man. He had lost ownership and control of the real estate holding company, Inmobiliaria Galt’s Gulch SA, and the real estate to his swindler of a partner, Mario Del Real. His investors, becoming more and more frustrated, began to see through his many attempts at covering up his incompetence and fraud. Johnson had run out of other people’s money and everyone’s patience. These are the reasons GGC is stalled, not the injunction.

The obvious question now is, Is there enough water? The investors think so, but can’t be sure. We have been told that when the water rights were granted, the area was wetter than today. Streams on the property that used to flow year round are now seasonal. And the avocado orchard failed for lack of water. Still, these observations don’t quantify the water underground.

If the 140 l/s number suggested from the hydrology report is used as a good estimate of water availability, and it’s agreed that the existing citrus orchards require 50 l/s, 90 l/s remain for the rest of the project. Since residential use requires much less water than agricultural use, it appears that a development of several hundred houses may be possible.

On a related note, Johnson left yet another land mine for the investors having to do with water resources. His lack of due diligence extended to residential wastewater, since little study or planning has been done with respect to its treatment and discharge.

Johnson was willing to fly blind because he was using other people’s money. We investors don’t have that luxury. Quantifying the size of the aquifer is our first priority after obtaining ownership of the project. It should have been Johnson’s first priority before agreeing to blow $6.8 million. For that material omission alone, he should be behind bars.

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By the way, you might have noticed that sometimes Johnson says that GGC is stalled due to the water rights injunction (dated Oct 2014) as mentioned above; sometimes says it’s stalled due to the “orchestrated chain of refund requests” of April 2014 that never happened; and other times says it’s stalled due to the nefarious plot *eye roll* between former employees, us investors and Chilean swindler Mario Del Real. We guess Li’l Kenny Johnson has trouble keeping his lies straight.

Future Convicted Felon Johnson: No Insult, Just Fact.

When the shtf for Johnson and GGC last August 2014, The Recovery Team began an email newsletter to report on our forensic investigations and keep everyone informed.

In that newsletter, we have fallen into the habit of referring to former developer Johnson as “future convicted felon Johnson.” In a recent “Radical Agenda Show” podcast, host Christopher Cantwell referred to this habit as a mere insult. However, we use the term because our legal counsel in Chile, Francis Lackington, showed us early on that Johnson committed many counts of two felony violations while selling GGC lots. Here is what Attorney Lackington explained to us about the Urbanism and Construction Act in Chile:

“The law specifically covers the subdivision of land, including rules and restrictions to the subdivision of land outside urban areas (article 55 of LUC). It covers the rules and requirements for the urbanization of land (article 134). It contemplates the prohibition not to transfer or promise to transfer lots of land while the urbanization is not complete and approved (136). The obligation to constitute a bond for the performance of urbanization works in order to obtain an authorization to sell lots prior to urbanization (129). The obligation of developers to constitute a bond or insurance policy, and issuing contracts before a Chilean Notary, in case of promising to sell properties where the developer receives an advance payment from the buyer, up to amount advanced, valid until the property is actually sold and registered in the name of the buyer (138 bis). And, the penalization as a felony of ANY violation of the developer to articles 134 to 140 of the LUC (138).

“Based on the above, we believe that lots sold as residential lots with an urbanization obligation from the developer (as stated in the Founders Club Agreements) clearly fall under LUC. Lemon orchards are outside of LUC.”


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Translation: for former developer Johnson to sell using promesas (a contract to sell real estate at a future time or with a trigger event such as subdivision) where he agreed to community improvements, he had to do two things:

  1. obtain insurance or a bond so that if the subdivision approvals weren’t achieved, he could refund his investors, and
  2. have the contracts notarized before a Chilean notary.

Violations of the Urbanism and Construction Act are felonies. Since former developer Johnson did not comply with either of these requirements, he is therefore a felon, and a felon soon to be convicted, hence the moniker “future convicted felon Johnson.”

Now, you might say, “Poor Li’l Kenny Johnson. He didn’t know about that nasty Urbanism law,” to which we reply, “Yes, poor Li’l Kenny. Orange is not his color, and a jumpsuit will make him look even fatter.”

Johnson screwed up royally by setting up shop without the knowledge or expertise necessary to execute on a real estate handcuffsdevelopment plan in Chile. We investors can’t help that. We have tried for more than a year through private emails, phone calls and face to face meetings as well as through our GGC Investor Update to explain to former developer Johnson that he is incapable of carrying out his business plan, that he’s in a lot of legal trouble, and that his best course of action is to turn over ownership and control of the project to the investors, as he many times has said he wanted to do, and let us handle this mess.

He has refused. Whatever happens next is his choice.

Sadly for everyone involved, we have determined through hard experience that the only way to remove Johnson is to pursue criminal charges against him. Many, if not most of us do not want to do this but we see no other way.

So “future convicted felon Johnson” it is–no insult, just fact.

NOTE: After Johnson’s interview, Cantwell told The Recovery Team that he knows there’s more to the GGC story than what came out in those two hours. He invited us to submit information that he said he would post to his website. We quickly forwarded him a version of the above blog post. He has yet to post it, or even to acknowledge receipt. Hmmm.


For further reference:

(a) Aricle 468 of the Criminal Code of Chile:

Art. 468. Incurrirá en las penas del artículo anterior el que defraudare a otro usando de nombre fingido, atribuyéndose poder, influencia o crédito supuestos, aparentando bienes, crédito, comisión, empresa o negociación imaginarios, o valiéndose de cualquier otro engaño semejante.

(b)Artículo 138° of the Law on Urbanism and Construction:

.- Será sancionado con la pena de presidio menor en su grado máximo a presidio mayor en su grado mínimo el propietario, loteador o urbanizador que realice cualquiera clase de actos o contratos que tengan por finalidad última o inmediata la transferencia del dominio, tales como ventas, promesas de venta, reservas de sitios, adjudicaciones en lote o constitución de comunidades o sociedades tendientes a la formación de nuevas poblaciones, en contravención a lo dispuesto en el presente párrafo.

(c) Law on Urbanism and Construction (for residential lots)

Artículo 138 bis.- Las personas naturales o jurídicas que tengan por giro la actividad inmobiliaria o aquellas que construyan o encarguen construir bienes raíces destinados a viviendas, locales comerciales u oficinas, que no cuenten con recepción definitiva y que celebren contratos de promesa de compraventa en los cuales el promitente comprado entregue todo o parte del precio del bien raíz, deberán otorgarlos mediante instrumentos privados autorizados ante notario y caucionarlos mediante póliza de seguro o boleta bancaria, aceptada por el promitente comprador. Esta garantía, debidamente identificada, se incorporará al contrato a favor del promitente comprador, en un valor igual a la parte del precio del bien raíz entregado por éste y establecido enel contrato de promesa respectivo, para el evento de que éste no se cumpla dentro del plazo o al cumplimiento de la condición establecidos por el promitente vendedor.