How do you say Potemkin Village in Español?

“The phrase “Potemkin village” (also “Potyomkin village“, derived from the Russian  Потёмкинские деревни, Potyomkinskiye derevni) was originally used to describe a fake portable village, built only to impress. According to the story, Grigory Potemkin erected the fake portable settlement along the banks of the Dnieper River in order to fool Empress Catherine II during her journey to Crimea in 1787. The phrase is now used, typically in politics and economics, to describe any construction (literal or figurative) built solely to deceive others into thinking that some situation is better than it really is.”

You might enquire, “So you people say that Johnson didn’t make any progress on the development. But he had two events at the property. Didn’t any investors go to these events, and didn’t anyone notice that nothing was happening?”

Well, yes, there were two marketing events at GGC, held at the farm on the Lepe property. And many investors went to these events. These were affinity scam events, for sure, where Johnson paid several lib celebs to show up and schmooze with his marks.

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(Don’t bother watching, it’s pretty bad.–webmaster)

Johnson may be crooked, but he’s clever. In addition to the celebrity “entertainment” seen above, he prepared his Potemkin Village for each event.

The first event was shortly after Johnson closed on the disastrous Lepe purchase and no one expected great progress.  However, we lepe faked subdivisionare told that he had the architects draw plot lines on satellite maps of Lepe as if there were a master plan in place. He even took individual investors to their “lots”–what lots, we don’t  know, since there was no subdivision approval–and told them he was reserving that land for them.

Johnson also hired road grading equipment and sent it up into the  Lepe hills. Many people were impressed with this. Yes, he did have a short stretch of road widened and graded, but so what? It led to nothing.

cutting roads 1

road grading 1

With the second event, Johnson put more effort into his Potemkin Village. He had renovations begun on the hacienda, aka club house, on the farm manager’s residence, and on some cabins scattered in the lemon orchards. The renovations on the hacienda and manager’s residence were never completed. But the new deck on the club house, which he didn’t pay for, was a big hit so many people didn’t seem to care.

Johnson had been making a big push on selling shares of the farm company he incorporated, Agricola y Comercial Galt’s Gulch. This company was supposed to own 50 acres of lemon orchard and 75 acres or so of additional land for fruit trees and row crops. Share sales were disappointing, however, because Johnson had not transferred ownership of the land to the company. Very few financial advisors would recommend to their clients buying into a shell company that may, some day, acquire farm land in Latin America.

At the second event, he tried to boost farm share sales by planting a small field not far from the club house with row crops. We spoke to a couple of investors who were fooled by this trick. For some reason we can’t understand, they thought that three acres of lettuce was progress. After the event, Johnson left the field unattended for the birds and rodents to destroy.

Not everyone was fooled by Johnson’s tricks. The insurrection among the investors that continues today and will end in an orange jump suit for Li’l Kenny really took off at the second event at GGC. Unlike the first event, where the investors sold the GGC concept to each other, during the second event, many figured out there was trouble in our libertarian paradise. In the end, Johnson’s Potemkin Village backfired.
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Oh, by the way, Johnson fancies himself as an environmentalist. That earth moving equipment above not only moved earth, but cut down some protected trees. What did tree hugger Johnson do about it? Well, what every good environmentalist would do. He had the workers bury the stumps so Chilean government officials wouldn’t find out, of course.

Isn’t GGC just a case of libertarian in-fighting?

In a word, no.

Ken Johnson is not and never was a libertarian. Want proof? Let’s go to his own words. When he returned to the GGC farm in April 2015 after his sabbatical, he started making a series of videos. In the first one he admitted that he is apolitical and stated that he never wanted politics as part of the community. He has, of course, since removed that video from his webpage but it’s still on vimeo.

“I’m not a political person. I don’t believe in political labels. Ah… there’s been some of that involved in our project due to the name, Galt’s Gulch, um… I wasn’t actually a big fan of the name, to be honest with you, um… the parties that were involved with… ah… with that in the beginning were… definitely behind the name, and I was a bit ambivalent to it and ah… and anyway the name stuck and here we are.”

So according to this video, libertarianism, Objectivism and the ideals of freedom had nothing to do with Galt’s Gulch Chile. Does he think we’ve forgotten almost two years of his marketing? Is he really trying to convince us that the name meant nothing? Then why choose it? Oh right, other “parties”–not partners–chose it, the name for what he claims is HIS community. And we are supposed to believe this?

Here’s a press release he posted at in Oct 2013. Funny, he doesn’t shy away from invoking Ayn Rand here:

Atlas Shrugged“The celebration is the first public event sponsored by the self-sustaining community inspired by Ayn Rand’s masterpiece, Atlas Shrugged.”

And the next paragraph in that press release is totally apolitical, right?

“Galt’s Gulch Chile was founded to give objectivists, libertarians and other proponents of individual liberty the opportunity to live according to their principles of free markets, voluntary association and minimal to no government interference.”

All four of his press releases at PRWeb use similar language. See here, here and here for the others.

We hope you are not wondering why Mr. Apolitical, Mr. Anti-Political-Labels, who didn’t want politics to be part of GGC, is using this verbage in his press releases.

Johnson is a case of a con man who identified his marks, gained their trust by portraying himself as one of them and then defrauded them. He fell in with the libertarians at The Dollar Vigilante, pretended to be a libertarian, then contracted libertarian employees and celebrities–Josh Tolley, Ben Swann, Bob Murphy, Wendy McElroy, Tatiana Moroz, Jordan Page, Luke Rudkowski–in order to cheat the rest of us.

He even took to using the salutation “To your freedoms” at the end of his emails.

GGC is a classic affinity scam. From Wikipedia:

“Affinity fraud is a form of investment fraud that preys upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or successfully pretend to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster’s ruse.

“These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.”

In addition to the decidedly non-libertarian Johnson, there are three Chileans who are working against the investors’ interests: the swindler Mario Del Real, Johnson’s thuggish henchman Ian Thornton, and the low-lives-conspiring Guillermo Ramirez. We can assure you, they are not libertarians, either.

There has been no in-fighting of any importance among the investors, who for the most part are libertarian. The only divisions were caused by Johnson’s typical lies and manipulations to stir up dissention. His goal was to have us fight each other instead of him. That was fairly quickly recognized and stopped.

Even Jerry Folta wants the investors to gain control of the assets, recapitalize and continue the project, despite his claims that he wants Johnson to be involved.

So, no, this is not libertarian in-fighting. It’s plain vanilla fraud.

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By the way, you might get a hoot out of this hokey vid. If you’ll notice at the 8:28 mark, Johnson said that his “background is… in the freedom industry.”

The freedom industry?!?

Always lying, always scamming–Johnson reminds us of the old joke about lawyers. How do you know when Johnson is lying? His lips are moving.

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I Never Took a Penny from GGC

All of us investors in GGC have heard Li’l Kenny Johnson say time and again that he never took a salary from GGC. Other than maybe GGC Investor Jerry Folta, we don’t know anyone who believes it. But Li’l Kenny having read Goebbels when he was a kid keeps saying it over and over, “I never took a penny from GGC.”

We won’t bother going into all the stories of Johnson carrying a backpack full of cash, making huge cash withdrawals from the bank, stuffing cash all around the dashboard of the GGC Jeep or going to the casinos to gamble with our money. Let’s just look at his own words. On March 13, 2013 Johnson sent an email to his erstwhile partner, Jeff Berwick. He wrote:

“GGC has paid me about $10-12k, which is two months, or less, of pay. I am taking a $6k salary and writing off the condo [in Las Condes] as our office…”

Hmmm. “Writing off the condo…” We think we’ll leave that as the subject of another post.

In addition to the above smoking gun, here’s a conversation Johnson might not remember.

Josh Kirley: Now, you say you’ve been paid nothing. You literally haven’t paid yourself at any point during this…?

Ken Johnson: I did this year. I paid myself this year.

Kirley: Am I allowed to ask what you’re paying yourself?

Johnson: I paid myself this year…. ah… what was the total? about… about $60 grand this year, last year probably ….

Kirley: [interrupting] and is that…. does that mean you worked for free last year?

Johnson: I have contracts. I have notarized contracts. I just haven’t taken the money. I took some of the money this year, so…

Wow. This conversation occurred in June 2014. It looks like Li’l Kenny gave himself a raise, quite a hefty one at that–almost 70%. He must have been doing a great job.

Here’s another tidbit, this from the only accounting firm to work for GGC, for about 10 minutes since they weren’t paid. In the notes to the 2013 accounting statements we find this:

“There is no salary recorded for the manager of the company, but apparently Mr. K Johnson has been withdrawing monies as his remuneration. This situation should be regularized by the appropriate documents (contracts) and making the relevant taxes and social security payments.”

Tsk, tsk. It appears that not only is Li’l Kenny lying to us investors about not being paid, he was not paying his taxes, too. We are shocked to hear it, because in his interview with The Economist, he was quoted as saying, “We pay our taxes. We obey the law.” See for yourself:

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We’ll Make Everyone Shareholders in GGC!

“On July 28, 2014, I offered to GGC clients, ownership in the land holding corporation of GGC. Following this offer, I awaited a response for my request to a discussion to arrive at a valuation for GGC, in order to then issue ownership to all GGC clients. My request for such a discussion was ignored by Josh Kirley, and those copied on that email, which was sent out in August of 2014, shortly before Mr. Berwick’s, Mr. Kirley’s and others’ planned public attacks on myself, as well as GGC, were carried out. ”
–Ken Johnson, from one of his patented endless, idiotic emails, June 3 2015.

Wow, it seems that Johnson came up with a great idea. 😉 To show all the “clients” that he meant well, and  that he’d love to share the wealth, he wanted to cut everyone in on the project, i.e. he’d give all of us equity in GGC. It was going to be his way of making us whole.

There’s just one teensy, weensy, little problem with that plan: we’re not stupid. Ok, we certainly were gullible when we started, but now that we’re wise to him, we’re not that stupid.

First, at the time of this offer, Johnson had lost both the management and ownership of Inmobiliaria Galt’s Gulch. He couldn’t give anyone shares even if he wanted to, and believe us, he didn’t want to. Second, IGG happens to be insolvent. If we were to become equity holders in IGG, we would be wiped out since equity claims are junior to creditors’ claims. We’ll keep our creditors’ claims, thanks.

This scheme was the inspiration for a new slogan for Li’l Kenny Johnson:fgc logo with tag line

If all you know about this magnanimous offer is found in the paragraph that began this blog post, you would think that Josh refused to communicate with Johnson on this subject. “Poor Li’l Kenny,” you might think, “having to deal with that big, bad Josh Kirley.” You would be wrong, however, having been tricked again by Johnsonesque deception.

On July 15 2014, Josh contacted Johnson to discuss GGC’s dire situation. For those of you keeping score at home, that’s 11 days BEFORE the email offer to give investors GGC equity. Johnson accused Josh of offering to buy shares from Mario Del Real, and then of wanting to take shares away from Johnson. Josh replied:

“Well, first off, I don’t know how many shares you have. Are they 10,000? Are they zero? Are they one? Second off, all those shares are [is] the right to pay back $6 million. Those shares are worth less than zero. I don’t want shares that are nothing more than that. I’m saying I don’t want anystock cert shares. I want less than zero shares. I think whether it’s you or Mario that has the shares right now, it’s worth less than zero. I want my loan back that I paid into, and the two plots of land that I paid for. I don’t see that happening with you and Mario fighting over the project. What does a share get you? To something that’s not paid off, that doesn’t have water and is $6 million in debt. I don’t want a share. I just want what I paid for from the beginning which were a hacienda, lemon orchards and the repayment of the loan.”

That seems pretty clear, doesn’t it? No equivocating there. But, unsurprisingly, Johnson couldn’t take “You’re an idiot” for an answer and pressed on. Josh was forced to reiterated:

“I think whoever did it [offered to buy Mario Del Real’s GGC shares] is a f***ing idiot. I’m telling you, Ken, I still don’t get what a share is, and I think a share in something that owes $6 million, and doesn’t have water rights, and doesn’t have revenue is worse than useless. I’m not asking for or wanting shares in something that looks so bleak right now.”

Let’s spell out this dirty trick. Johnson went public with an offer that sounded generous but that he couldn’t complete–remember, he didn’t have control over the shares to give them to anyone–an offer that he knew ahead of time would be rejected by any rational person, and was already vehemently rejected by Josh. Then he patted himself on the back saying, “What a great guy I am,” and lied to outsiders about the incident.

Li’l Kenny should have been a politician.

Btw, we think it’s almost certain nobody tried to buy shares from Mario Del Real. This was either a lie from Del Real or from Johnson. At the time–and today, for that matter–they likely were in cahoots.

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When Is an Investor not an Investor?

When he tries to make an investment in Galt’s Gulch Chile, of course.

Former GGC developer, Ken Johnson, makes a point of pretending that there are only a handful of investors in GGC. The rest are “clients.” The reason for this insistence might seem a bit of a mystery to outside observers, since it makes no sense. You’ll understand his subterfuge when you’ve finished reading.

First Round Founders Were Equity Investors.

Johnson accepted money from four families in what he called “The First Round.” He refers to these people as “The First Round Founders.” They were given a “Heads of Agreement” document to sign as a contract in which it was agreed they would receive an equity position in GGC. How that eventually shook out, or rather didn’t shake out, is a long story–nothing is easy when con man Johnson is involved. Be that as it may, the First Round Founders are agreed by all including Johnson to have been investors in GGC.

There is one other person, Jerry Folta, who Johnson refers to as an investor. According to Johnson, Folta paid him $250,000 for the promise of equity in Inmobiliaria Galt’s Gulch after Johnson was outed as a con man all over the internet. This was a private, unadvertised agreement, the details of which have not been verified. We assume that the two signed a promesa, a contract that has provisions that trigger with some future event. In this case, the future event is likely that Johnson gains uncontested ownership of shares of Inmobiliaria Galt’s Gulch.

Due to the dueling fraudulent actions of Johnson and his partner, swindler Mario Del Real, Johnson currently (November 2016) has uncontested ownership of only 0.5% of Inmobiliaria Galt’s Gulch. For more on that fiasco see our blog post, “Rio Colorado: The Con Man Got Conned.”

Johnson doesn’t seem like he’s trying very hard to  get the shares back, though. He’s had a slam dunk, air tight case of forgery against Del Real sitting gathering dust for two years now–the tell that reveals Johnson and Del Real are still partners in crime.

The Types of GGC Investors

So, we have four equity investors and one maybe-sort-of-one-day equity investor–good kj dunceluck with that.

Johnson says that everyone else is a “client” of GGC and has no claim on the assets.

Au contraire. A substantial number of the remaining GGC families made loans to either Inmobiliaria Galt’s Gulch or to Agricola y Comercial Galt’s Gulch, and obviously have claims on the project’s assets. Where we come from, someone who loans money to a business is by definition an investor in that business.

Further, when Johnson established the farm corporation, Agricola y Comercial Galt’s Gulch, that was going to make millions selling branded organic produce around the world, he sold shares in that company, too. He sold approximately one third of the shares to… wait for it… investors.

We are well aware that the people who put money down to buy a lot at GGC are not investors in any of the GGC entities. However, in keeping with common practice, we refer to them as investors, as well. These people also have a claim against GGC since they have not received titles to their lots.

Of the 73 GGC families, 34 paid solely based on their promesas for lots. The rest are investors in the GGC project to one degree or another, having bought shares in the GGC companies, holding notes from the GGC companies or, more often, both. (Many of these investors also hold promesas for lots.) While Johnson received  $1.4 million from the lot buyers, he owes $4.7 million to the note holders. In total, from the investors in the GGC project, Johnson received $8.65 million.

Therefore Johnson’s idiotic insistence on calling the investors “clients” is just that: idiotic. And the vast majority of money paid to GGC was for investment in the project. Moreover, all this is easily provable since the investors gave us copies of their contracts and wire receipts.

So, why, you might ask, does Johnson continue to lie about the situation? Because in his zeal to steal our money, he forgot one teensy, weensy, little detail: US federal securities laws.

SEC Regulations

To sell shares in a private company, one must comply with the SEC regulations. Here’s the link to an SEC FAQ on this very topic:

Small Business and the SEC: A guide for small businesses on raising capital and complying with the federal securities laws.

A quick perusal makes it pretty obvious why Johnson doesn’t want it Li'l Kenny's handcuffsto be known there were investors in GGC. Johnson did not register with the SEC, nor did he seek an exemption from registering, yet he publicly solicited investment from Americans. In addition, our interviews with the GGC investors revealed that Johnson never verified accredited investor status with the equity investors.

Here are a couple of choice sentences from the FAQ that should send shivers up Li’l Kenny Fraudster spine:

“…all securities transactions, even exempt transactions, are subject to the antifraud provisions of the federal securities laws. This means that you and your company will be responsible for false or misleading statements that you or others on your behalf make regarding your company, the securities offered, or the offering. You and your company are responsible for any such statements, whether made by your company or on behalf of the company, and regardless of whether they are made orally or in writing..

“The government enforces the federal securities laws through criminal, civil and administrative proceedings.” [Emphasis added.–Ed.]

Coward Johnson's new logo

Btw, it’s utterly ridiculous for Li’l Kenny Fraudster to continue this charade that we are all “clients” since he confirmed that the first four investors were equity investors, openly admitting his SEC violations.

In addition, we have it from someone who knows, it’s the advertising to Americans that is the trigger for the SEC to, shall we say, become interested in Li’l Kenny Fraudster’s GGC activities, and there’s plenty of proof he did that repeatedly.

Don’t you just love the wayback machine?

What is the Eddie Willers Email?

The following letter was written by Josh Kirley and sent to as many GGC investors has he could determine. It was the result of months of josh circleinvestigation and thousands of dollars trying to uncover the truth about GGC and expose Johnson for the con man he is. We owe Josh a debt of gratitude because without this effort, we investors might still be in the dark.

Josh used the pseudonym Eddie Willers after a character in the novel Atlas Shrugged, the work that lent Galt’s Gulch Chile its name. We think he should have used Hank Reardon instead.

Johnson has never refuted anything in this letter. His only answer has been to attack Josh for using a pseudonym, as if that’s the crime of the century.

What follows is long but it is for the most part spot on, and therefore worth the read.

I am sorry to be the bearer of bad news, but you are receiving thissantiago email because of your investment in or association with Ken Johnson and Galt’s Gulch Chile (GGC). What follows is a brief timeline of this project – a short summary of a much larger story that is still being written. This will be the first of many emails detailing the scheme of which you are a victim.

In 2012, Ken Johnson and Jeff Berwick (The Dollar Vigilante) explored the idea of creating a community in Chile that would appeal to people worried about the financial and political stability of their home countries. Chile, they believed, would be a welcoming home for those of a libertarian/anarchist and free market bent, much as Argentina is home to Doug Casey’s Cafayete. Turns out that John Cobin (Host of Red Hot Chile) and his associate German Eyzaguirre also had plans to launch a community in Chile. When Berwick and Johnson met Cobin and Eyzaguirre in Chile in late 2012, they decided to join forces. Cobin and Eyzaguirre had tried to purchase land near Curacavi – a plot of land referred to as El Tranque (aka Freedom Orchard) – but could not raise the funds to fulfill the contract. Cobin and Eyzaguirre helped Johnson find a tract of land nearby – Caren, known locally as “El Peñon” for a large rock formation near the crest. In exchange for finding the property and helping to facilitate the deal, Cobin and Eyzaguirre would receive $250,000 and 30% of the shares of the holding company. Berwick and Johnson would evenly split the remaining 70%.

$1.75 million was raised from four Founders, known as the “First Round.” Within a month, the sale had been made for $1.18 million – the majority of the money that the four founders (funders) had put up. None of the founders was Johnson, Berwick, Cobin and Eyzaguirre, or any of his associates. They were just regular people who wanted to move to the proposed community. As quickly as the sale had been made, it was discovered that the land would be unsuitable for the promised development. They told the first rounders it would be subdivided into 3,000 parcels. Turns out it could only be divided into 12 parcels. And even those 12 had building restrictions due to the elevation and being zoned for agricultural use. To top it off, though there were water rights (surface only), there was very little water. Johnson failed to register the few wells that existed, within the required timeframe, making matters worse. The entire deal was a spectacular failure. Johnson would later place fault with Cobin and Eyzaguirre for misrepresenting the possibilities of the land. That should have been the end of Ken Johnson’s tenure as developer or manager of a community of expatriates in Chile. Instead, it was just the beginning.

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This photo appears in early marketing lit for GGC, so the investors of course thought it was of El Peñon. It is of a neighboring property.

To rewind a bit, before the sale of Peñon was registered to one of many legal entities tied to GGC, Berwick and Johnson managed to nullify their deal with Cobin and Eyzaguirre, and register title to the albatross Peñon land to a Chilean entity – Inmobiliaria [Galt’s Gulch] SA – that only they had 50/50 control of. Johnson’s swift move to oust Cobin would foreshadow Berwick’s own treatment by Johnson.

In a display of pure brass, Johnson doubled down and found another property adjacent to El Tranque and Peñon: a land known as Lepe. Without a penny to his name or a single investor, he negotiated a cash deal (to be paid in installments), agreeing to pay a staggering $6,850,000.00 USD for land and water rights. Now, why would the seller, Guillermo Ramirez, make a deal with a total stranger, from a foreign country, who had no money and no reputation? In short, he did so, because Johnson was offering him nearly 4 million dollars more than the price he had already agreed to sell the land for (to Cobin and Eyzaguirre). Locals were astounded by the price tag. Some allege there was a kickback scheme between Ramirez and Johnson; this theory is buoyed by the fact that in addition to the inflated purchase price, Ken Johnson was to issue a 5% stake in Galt’s Gulch Chile to Sr. Ramirez, when payments were completed. Still others believe this is just another case of a foolish Gringo being taken by a wise local who grossly overstated the value of the land, the profitability of the farm, and the amount of water. (Johnson would later exaggerate these already inflated figures to potential clients.) The actual amount of water is not known because Johnson, for a second time, going against the advice of his paid legal counsel, performed no due diligence. Not a single water test was performed.

Upon hearing that his employee and partner had unilaterally Lepe from towerentered into another hasty land deal, Berwick panicked. Johnson had no credibility or reputation. This entire venture was on the shoulders of Berwick. The initial debacle could have been enough to destroy his reputation. He had been heavily promoting the idea of this community, shared 50% of the holding company, and had even given Johnson 50% of his organization, The Dollar Vigilante. Ken was also doing other business development for The Dollar Vigilante, most notably a questionable Paraguayan passport program. Berwick apparently felt he was in too deep to turn back. And even though he had doubts, he continued to play the hand he was dealt, and went about promoting the community and stood behind Ken Johnson’s efforts to secure the additional land purchase.

On both El Peñon and Lepe, Ken Johnson paid a premium and did no due diligence. He did not sufficiently verify the zoning status or perform water tests, either time. And he did not commit a cent of his own money to either purchase. The same can be said for Cobin, Ezyzaguirre, and Berwick. Since Johnson had no skin in the game and he was not a public personality like Berwick, Casey, Black, or Cobin, he never had anything to lose. And, he would behave accordingly. At one point, the lawyer for the New Zealand trust – Evgeny Orlov – described Johnson’s behavior as follows: “Ken has accused almost everyone I know of extremely serious things when he appears to be playing with his investors money like a child in a sandpit.” (2/26/14).

In defending his rushed purchase, Johnson misrepresented to Berwick and other investors that there were several competing bids on the land purchases. He made it appear that time was of the essence in both deals; this high pressure sales tactic would later be used on potential investors. With Ken Johnson it was always: “We must act right away, the time is now.”

His malfeasance would not be limited to acquisitions. His behavior would, within a year, alienate almost everyone who was associated with the project: partners, employees, professionals, vendors, the local community, and investors.

Ken Johnson partners with someone, uses their money, time, kj duncereputation, and resources, and when they are no longer of use to him, he discards and vilifies them. And even though Ken Johnson has been the sole director of Galt’s Gulch Chile since inception, he has taken no responsibility for its continued failure and downward spiral. It is always everyone else’s fault

In April of 2014, Johnson showed his true self and his true motives. Even though he was not paying his investors, his employers, his contractors, or the landowner, he negotiated to purchase 51% of a company called Rio Colorado from a local “businessman” who had worked for the Chilean IRS: Mario Del Real. Johnson agreed to pay Del Real the mind numbing sum of $8.1 million USD. This was to be a private, personal purchase for the sole benefit of Ken Johnson, having no benefit for, or relation to, GGC.

Let that sink in. Someone with no backers, a negative net worth, and owing millions of dollars, agreed to make a private purchase of this magnitude. Why did he think he would get away with it? Because he already had. Twice. It began with El Penon, then pulled it off with Lepe; now he figured he could do it again with Rio Colorado. When the money came due, and he was light $8.1 million out of $8.1 million, he decided to trade the equity, held by GGC.

This would be tricky for a couple of reasons. First, he told his investors and clients that all shares were held in escrow. Second, it would need approval. Knowing this would not be possible without support of the board of directors, he simply named a new board of directors: the very family he was trading GGC’s assets to: the Del Real family. What was interesting about this maneuver is that it was done twice. Both times through official notaries. Each times with drastically different signatures, proving that at least one, if not both, documents are forgeries. The new, hand picked Board, had no assets, investments, or interest in GGC and were granted control of the entire project. Mario, after receiving over a quarter million USD, became majority shareholder; his daughter Pamela became managing partner, treasurer, and accountant. And, his children were each given 10% ownership. Since Ken no longer had the ability to receive international wires because he refused to identify the source of funds, Pamela Del Real’s personal bank account became the corporate bank account for GGC. Including bitcoin wallets, this would be one of more than 15 accounts used by Ken Johnson to receive client funds.

At this point, I bet you are wondering, ‘How did this happen?’. How was someone with no experience, no reputation, and no money, able to pull off a multi-million dollar Ponzi scheme? Well, first it took big balls. And each time he was allowed to get away with something, he got even more brazen.

Second, he had a lot of accomplices. Some were willing, but most were unwitting.

These pix and video are from Johnson’s environmentalist affinity fraud days. He was “president” of Enviro-Energies selling wind turbines for “clean” energy. He claims he was the victim of that scam. As president. Hmmm. The company was busted up by the feds. Johnson wasn’t prosecuted, but the records show he wasn’t president–just an exaggeration, we guess.

Btw, Leno recently told one of the investors he doesn’t know Johnson. We wish we didn’t, either.

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By aligning himself with established names, these accomplices gave Johnson an air of respectability. People saw that Johnson was aligned with people who they knew and trusted, so they transferred that trust onto him. Initially, it was his association with Jeff Berwick that raised money for the first land purchase. Later, it was his direct association with media personalities like Josh Tolley and Ben Swann that gave him credibility within the Freedom movement. Others were swept into his web when Johnson mentioned that he had worked with Jay Leno, Ed Begley, Jr, and Mario van Peebles. The fact that he was represented by the Carey Group, the largest and most prestigious law firm in South America, got many investors to let their guard down. This was a most curious pairing because Johnson actually paid these attorneys, with investor funds, to represent himself against those same investors. As recently as 8/18/14, Johnson forbade the Carey Group (and all of his former legal advisers) from sharing any information with GGC clients. And, ignoring their own code of legal ethics, they complied.

In fact, to date, Johnson has never shared a budget, a financial ledger, a business plan, a mission statement, or any formal documentation with a single client. He refuses to reveal how much money he has taken in, how much money he has spent, how it was spent, how much money he has, and how much money he owes. He cannot or will not even say who owns the land and who is running the project. These are all very basic, straightforward questions that every client and investor deserves to have answered.

I do not expect you to accept the story from an anonymous email. I implore you to do your own investigation. Do not make the same mistake twice, by taking another stranger at his or her word. Blind trust created this situation. Be accountable to yourselves and to each other. Do some research. Reach out and contact your fellow investors/victims. Email or call former employees, former attorneys, questionarchitects, builders, salespeople. You will find a single bond that joins them all. Every single one of them was lied to by Ken Johnson. Every single one of them was mistreated by Ken Johnson. And, every single one of them is owed money by Ken Johnson.

Ask what he did with the millions of dollars that he has taken in. Ask how many bank accounts he has. How many bitcoin wallets has he used? Why did he pay over a million dollars for land that could not be divided or lived on? Why did he agree to pay $6,850,000.00 (over 8 million, after late fees) for land and water rights , when the owner had already agreed to sell them to someone else for only $3 mill USD? Why did he refuse to identify the source of his funding to his own attorneys and his own bankers? On more than 10 occasions. Why has he physically and verbally abused employees and issued “cease and desist” orders or threatened suit against more than 2 dozen current investors and former workers?

Who owns GGC? Who is the managing director? Who holds the bank account or accounts that new investor money flows into? Who is the sales director? Who is the general contractor? Who is the accountant? Who is the attorney? Where are the financial records? Why has a master development plan or business plan not been created or approved? Why have farm and orchard owners not received dividends? Or any information, for that matter? Press Ken on why he has not fulfilled his repeated promise to turn the project over to the clients, whose money he squandered, in the percentage that they invested

Here are a few unsolicited suggestions, from someone who left a great life and a job, to move to Chile, in the hopes of building this ambitious project. First, you have to accept that you have been conned. Most of you are probably not shocked by this news. Some of you understand the nature of investments, and know that there are not sure things. For others, this may be more difficult. But, you must accept that your money is gone. It was taken by a crook. A con artist without a conscience. He is a tyrant whose only power has come from the money that he has received from trusting investors. Needless to say, it is incumbent upon all of us to make sure that he receives no more. To do so would be abetting a Ponzi scheme.

Second, you need to extricate that crook from the equation. With the amount of damage that Johnson has done to this project, the road to success is much longer and more difficult than it otherwise would have been. But, there is no doubt, in anyone’s mind, that as long as his claws are in GGC, there is absolutely zero chance of this community ever becoming a reality. He and Mario del Real have proven they will sell off every marketable asset GGC owns, while neither of them have ever put in a penny. Meanwhile, you all, the real owners, are left on the outside looking in. Federal authorities, in both Chile and the US, have been alerted to his actions, and are acting on them. But, a lot of damage can be done between now and the time that justice is served.

Once he is removed, there will be a great deal of messes to clean up. Johnson has made enemies around the Curacaví region, in Santiago, the United States, and on four continents. He did this in the name of GGC. Whether it is through active marketing or total rebranding, the damaged parties need to know that there has been a clean break between Ken Johnson and the people he purported to represent. Finally, he needs to be replaced.

His replacement should be everything he is not. This person should have experience. They should have references. They need to be bilingual. They need to be local, or have a knowledge of the local culture. Most importantly, they need to have their own skin in the game. Johnson behaved so recklessly because he had nothing to lose. He spent so frivolously because it was not his money. You need to align with an equity partner, whose success is tied to your own.

Finally, there needs to be transparency and a system of checks and balances. Johnson kept this sham alive for so long because he was able to compartmentalize and separate so many parties; there was no transparency. He refused to introduce investors to each other. If he found out that clients were communicating, he denounced it as meddling. If employees talked to one another (ostensibly, about the fact that they had not been paid in months), he reprimanded them for “gossiping.” There was no oversight, no legitimate Board of Directors, no accountability. Secrecy begat tyranny.

Finally, you all need to become involved. This should not be a passive investment. Get your asses down to Chile. Live on the land. Oversee the construction. And, take it upon yourselves to build this community into your own vision. All is not lost. But, it will be, if you do nothing.

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When Is a Partner not a Partner?

When he’s Ken Johnson’s partner, of course.

John Cobin and Germán Eyzaguirre identified a property, El Peñon, cobin circlethat they thought would be perfect for a real estate development. Through the libertarian grape vine, they discovered that Jeff Berwick and Ken Johnson were interested in starting a community and were looking for a suitable location. They connected to become partners in GGC, or so they thought…

Cobin and Eyzaguirre made a handshake deal with Berwick and Johnson where they would be junior partners and be paid for finding the property, incorporating an entity for holding title, arranging the purchase and being the developers. They were given powers of attorney by Johnson and Berwick to close on El Peñon.

We speculate that Johnson didn’t want to pay the agreed upon fee of $250,000 to his new partners. To that end, he cooked up a scheme to discredit Cobin that would convince Berwick to join him in kicking Cobin and Eyzaguirre out of the project, saving them big bucks.

Johnson accused Cobin of trying to sell El Peñon out from under them to another newsletter writer and real estate investor known as Simon Black. This accusation had an air of credibility since Cobin and Black knew each other and had done business together before. It was a lie, of course, but it did the trick. The dissension that ensued led to the original partnership of the four being dissolved, with no significant cost to Johnson.berwick at penon

That’s two partners down, and one to go.

Johnson proceeded to get a power of attorney from Berwick to incorporate the new GGC entity that would buy El Peñon.  Berwick assumed that he and Johnson were 50-50 partners, having agreed to that in another handshake deal. However, Johnson incorporated Inmobiliaria Galt’s Gulch SA excluding Berwick. Berwick’s name does not appear as a shareholder, as a director or as a manager in the new company document. See for yourself: Estatutos Inmob. Galts Gulch S.A. _3_  Johnson’s name, however, does appear in the Estatutos as the Primer Gerente, or General Manager. QED.

And that is how Johnson defrauded his three partners and took total control of Galt’s Gulch Chile without providing any capital.

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By the way, we recently called our friend, Simon Black. When we asked if it were true that Cobin approached him to buy El Peñon in October or November of 2012, his swift answer was, “Absolutely not.”

One more point: we are sure this is exactly what happened because Johnson threatened to use the same maneuver when he was entering into his second disaster of a real estate purchase, El Lepe/Las Casas.

The First Round Founders–the four equity investors–had just discovered, more than six months after paying Johnson, that the first property was essentially worthless to them. He warned one of them to side with him against Berwick in the partners’ feud or he’d incorporate a separate entity to hold title to the second property, El Lepe/Las Casas. They would have no equity interest in the new entity and therefore no claim on any of GGC’s profits. They would be left only with equity in the  problematic El Peñon that couldn’t be developed.

Ironically, they may have been better off if Johnson had gone ahead with that maneuver. The equity investors would at least have title to El Peñon where they could possibly build houses or that they could sell to recoup some of their loses.

The Joys of Working in Sales under Ken Johnson

This stunning email was written by a GGC Account Manager about the lack of information and proof of real activity coming from “managing partner” Ken Johnson. The timing is just one month before the closing on the second disastrous property purchase Johnson made for the project, Lepe/Las Casas.kj dunce

Johnson loves to characterize dissension among GGC employees as a grand plot to destroy him and GGC. Yeah, right. Life is a melodrama. Psychologists call this “victim playing,” when a abusive personality turns the tables to appear as the victim rather than the aggressor.

The true explanation of what was going on is obvious: Johnson was in danger of being exposed as a con man and had to attack his employees to cover up his scam. Far from trying to destroy the project, these conscientious workers were desperately trying to correct what they misinterpreted as Johnson’s incompetence in their effort to deliver on the promise of GGC. This email is a prime example.

From: GGC [Account Manager’s Name]
Sent: Wednesday, July 17, 2013 9:16 AM
To: GGC_Ken Johnson
Cc: Two other Account Managers; Andres Chirgwin (project lawyer); (Jeff Berwick, The Dollar Vigilante and GGC partner)
Subject: Re: Sales update


Here is a collection of questions, concerns and the feedback from serious clients, which I’ve communicated many times. They expect to see these answers in writing, with details, not just guesses and estimates. It is important to remember that many of them went months and months without receiving any kind of feedback to their inquiries.

1. They want to see a map and layout of the lots.

2. They have questions about zoning.

3. They have questions about building codes.

4. A few have expressed (and many more probably have unexpressed concerns) that the timelines have been greatly under-estimated in all of our communications and promises. Many are very wary, having seen other similar communities fail to deliver on promises, and want to first wait and see if infrastructure is indeed being put in, etc. Almost everyone asks the question, “How many people are already living in GGC?” or “How many lots have you already sold?” inferring [sic] that they don’t yet have the confidence in the information they’ve received so far in order to be early-adopters.

5. A number of parties have asked whether there are taxes on their purchase, and want specific details on closing costs and property tax.

6. Almost everyone brings up HOA fees, and simply telling them that we expect the costs to be low is not specific enough, and the agreement gives no clear answer.

7. They have questions about the cost and feasibility of putting in a sewer and/or field beds, since those are going to be their responsibility.

8. They have questions about exact costs and availability of water.

9. They want a clear answer on when they will get to choose their lot, and have title transferred to them.  This is a very important date in their mind, and we cannot over-promise and under-deliver.

10. They have questions about legalities regarding our corporate and banking structure, as well as Chilean real estate law.  For example, here is an email which contains questions that are quite common:

1. Could you please provide any form of proof that Galt’s Gulch Trustee Limited is an owner of land in Region Metropolitana, Provincia de Melipilla, Comuna de Curacavi? It would be great if there’s a public register of land property online, but scanned copy of official document will also do.

2. Could you please provide the Title Report for the property (Estudio de Títulos) and a Property Tax Debt Certificate?

3. Could you please provide the official classification of the land and documents allowing its owners to build infrastructure/houses/… and what are the exceptions/limitations for the use of this land? Besides others, I’d like to make sure this is not something like a protected national park etc. If such documents are currently not available, what are you basing your expectations of future approvals from government authorities on?

4. Could you please refer the applicable real estate laws in the country of Chile?

5. Could you please explain what is the reason for using laws of New Zealand as a jurisdiction for this agreement?

6. The pre-sales agreement is quite vague when it comes to guaranteed deadlines for completing GGC Master Plan and infrastructure. It also doesn’t mention consequences in case the GGC Master Plan or the infrastructure is not ready in “reasonable time frame.” This is probably the most important concern as e.g. I wouldn’t like to end up stuck waiting for years for Master Plan to be ready without having any options of withdrawal…

I’m looking forward to your answers so that I can gain more confidence about this investment.

Kind Regards, Marian

My own concerns from a contractor perspective are:

1. I have not seen an agreement, after 4 months, that details anything around my remuneration.

2. You indicated earlier that commissions would not be paid until land titles are transferred to the owners. Firstly, I feel that this is untenable on principle.  My job is to close the sale; I should be remunerated at the time the client pays.  Secondly, this will take a very long time, based on what I’ve learned from past experience, and from speaking with Chris Serin.

3. The secrecy and paranoia are incredibly undermining.  For example, writing (in CC to others, no less): “I have closed several Founders Club sales at the show [FreedomFest, where Johnson had a booth, for which of course he didn’t pay] and also with clients whom have spoken with you guys or me in the past.  I will not be disclosing who is purchasing and who is not”  is not acceptable, nor is this thinly-veiled attempt at public shaming of my team members, “There seems to be a complete lack of communications throughout the month of July from more than one of you, which I would like to learn more about, since this has turned out to coincide with a complete drop off in your sales production.”

4. The sales team has had no access to the database for many weeks, and scores of email issues. That has made it, at times, impossible to do business.

5. I have concerns that my Founder’s money will be safely kept in a non-operating account into which they wired it, and not transferred into local operating accounts, until the time that land is purchased.  This is crucial, because the Founders expect to be paid back 100% of their funds, and I do not feel comfortable telling them to put their money at risk until a lot of these questions are answered.

6.  I have concerns about the numbers required for profitability. It appears very unlikely, or at least a very long and difficult prospect, to get the low density that is required for us to sell enough lots in order to firstly, pay back our Founders, and secondly, put in the kind of infrastructure that will be required to make a viable community. There has been no business plan that has outlined how the numbers will work with the unfavorable lot density requirements at present.

7.  There has not been any communication from management in all of July, and I haven’t received any new leads. I had completed contacting all my existing leads in June.

8.  Many of my clients, and clients of the rest of the sales team, have visited and toured the property. Almost none of them have moved forward to purchasing, and there is a reason for this, if we are honest with ourselves. And it has nothing to do with sales activity. They have seen a large piece of outback land (albeit gorgeous) that is undeveloped, shows very little sign of any activity or infrastructure. There has not even been a webpage until a few days ago. [NB Emphasis added] This, together with many unanswered questions, is a clear indication that even after visiting, they are tentative about putting their money into the project.

There is a huge groundswell of enthusiasm in this project; that much is clear. But that enthusiasm is also based in the reality of knowing how hard it is to bring a project like this to fruition, and it is only natural that potential investors in this economic climate are very wary of putting money at risk in a project in which there are still so many questions needing answers, especially in a foreign country of which they know almost nothing, much less the language. I have a lot of potential Founders, and lot buyers, who are on the cusp, and desperately want to feel comfortable sending their money in. Everyone wants this project to work, and I have no doubt that it is possible to have hundreds of people invest in a very short timeframe, once the issues that I have relayed in this message have been addressed.

Best regards,

[Account Manager’s Name]
Account Manager
Galt’s Gulch Chile US toll free: ext. xxx

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By the way, do you think that the lack of activity in bold in the above letter might be evidence of former developer Johnson’s intentions?