Who Owns How Many Shares of GGC and What Did They Pay?

When GGC began, Ken Johnson and Jeff Berwick arranged for John Cobin to incorporate an entity to hold title to the real estate and manage the development. Cobin incorporated Galt’s Gulch Chile SA, and that entity agreed to buy the El Peñon property. The ownership and funding of that entity was as follows:

cap shares oct 2012

  • Berwick: 35% of the shares, $0.00 funded.
  • Johnson: 35% of the shares, $0.00 funded.
  • Cobin and Eyzaguirre’s partnership: 30% of the shares, $0.00 funded.

Johnson immediately executed his plan to defraud his partners of their shares. He instructed the project lawyers to incorporated Inmobiliaria Galt’s Gulch SA (IGG), and arranged to transfer GGC SA’s purchase and sale agreement for El Peñon to this new entity. The ownership and funding of IGG was as follows:

cap shares nov 2012

  • Martin Vila, lawyer: 50%, $0.00
  • Jorge Cordova, lawyer: 50%, $0.00

Vila and Cordova, the lawyers who incorporated IGG, held ownership for Johnson and Berwick, since the partners were out of the country at the time of incorporation. The lawyers were to transfer ownership when asked to do so.

Remember, too, that the corporate documents (here and here) for IGG, unlike those for GGC SA, name only Johnson as having a management position, and there is nothing about who is on the board of directors. As of incorporation of IGG, Berwick is neither a shareholder, nor a manager, nor a director of the company that was to hold title to the real estate.

While this was occurring, Johnson and Berwick were working with a second law firm in New Zealand to establish a trust structure to hold title to IGG. Johnson was the protector of the trust and Berwick and his wife were beneficiaries. The trustee was to be a New Zealand corporation. These lawyers also drew up the Heads of Agreement contracts, jurisdiction in London, for the equity investors of GGC.

Johnson told the equity investors that they would be beneficiaries of the New Zealand trust. This trust structure was never completed nor capitalized. The equity investors’ funds were paid into a law firm’s account in New Zealand and transferred to Banco Itaú in Chile. These funds were used to buy El Peñon on Dec 19 2012 (date of deed), and for working capital for the first seven or eight months of GGC’s operation, including Johnson’s compensation, although he claims he was never paid. (See blog post “I Never Took a Penny from GGC.”)

On April 26 2013, Vila and Cordova transferred their 100% ownership of IGG shares to Johnson and Andrés Chirgwin, GGC’s new lawyer. The share ownership and funding of IGG looked like this:cap shares apr 2013

  • Johnson: 99.99%, should have been 46.5%, $0.00.
  • Chirgwin: 0.01% (one share), $0.00.
  • Berwick: 0.00%, owed 46.5%, $0.00.
  • Equity investors: 0.00%, owed 7%, $1.75 million.

We suspect that Vila and Cordova didn’t transfer shares to Berwick because Johnson held Berwick’s power of attorney for GGC’s affairs. In a perfect world, Vila and Cordova would have notified Berwick of the impending transfer of ownership. However, the lawyers were treated to Johnson-esque abuse (crazy demands, crisis management, criticism, insults, non-payment–you know, the usual) and had had it with him. They were probably happy to follow the letter of the law and to be completely out of GGC.

Johnson owed shares to the equity investors and they soon began to agitate for what they were owed. The documents they received during the sales process said that GGC would raise $25 million in capital, so therefore their units of $250,000 would entitle them to 1% of the project. They had no way of knowing that the $25 million was a ridiculous pipe dream and that they were the sole source of equity capital.

As time went on, it dawned on them that they were not exactly treated fairly, and they demanded a greater ownership position than the measly 1% per $250,000 “investment” they were promised. Johnson, ever the generous soul, said, “Sure, I don’t care. I’ll triple your ownership. How do you like me now?”

Also, as part of the contract with Guillermo Ramirez’s Agricola Guipaca Limitada for the Lepe/Las Casas property, Johnson agreed to transfer 3% of Galt’s Gulch Truster [sic] Limited to Ramirez and 2% to Ramirez’s lawyer, Hector Ricardi. This was supposed to be a New Zealand corporation and trustee of the New Zealand trust.

When Chirgwin and Johnson parted ways in the fall of 2013, Chirgwin’s share went to Johnson’s thug, Ian Thornton. Thornton is a Chilean laborer who does a good measure of Johnson’s dirty work in exchange for cocaine money.

This is how the ownership and funding looked in Oct 2013:

cap shares oct 2013

  • Johnson: 99.99%, should have been 39.5%, $0.00.
  • Thornton: 0.01% (one share), $0.00.
  • Berwick: 0.0%, owed 39.5%, $0.00.
  • Equity investors: 0.00%, owed 21%, $1.75 million.

Of course, Ramirez and Ricardi get nothing if they were to get shares in the New Zealand Trustee, since the New Zealand structure doesn’t really exist–not that anyone else gets anything, mind you. But it does serve Ramirez and his Cracker Jack lawyer right for not performing their due diligence–just like many of us.

The situation remained as above to the end of 2013. Berwick realized he had been defrauded of his ownership in June and spent the remainder of the year arguing with Johnson for his interest. The equity investors got their commitment from Johnson for a bigger cut, but they couldn’t actually get the shares, as Johnson played his usual passive aggressive game. The trust lawyers repeatedly emailed Johnson, telling him that the trust structure in New Zealand was incomplete exposing GGC investors to double taxation. And Johnson continued to shuck and jive.

Then he met Mario Del Real.

We speculate that the locals realized Johnson was a scam artist. We suspect that Mario Osses, a local politician and lawyer, knew that Johnson’s operations violated all kinds of laws and he was therefore vulnerable. This pol sent his buddy, Mario Del Real, over to insinuate himself into the project. If this weren’t the plan, at least it is what happened. Ultimately, Del Real was not only able to wheedle his way into a management roll in GGC, he took over the board of directors and ownership, too.

Johnson, who didn’t have a pot to piss in only 15 months before, received the millions of dollars flowing into GGC. By the end of January 2014, Johnson had taken in $6.6 million in loans, payments for lots and payments for shares of the GGC agriculture entity, Agricola y Comercial Galt’s Gulch SpA. That was in addition to the $1.75 million from the equity investors. He must have thought he was a wheeling and dealing genius. When he should have been concerned with developing the real estate at GGC, he was trying to become important in the Bitcoin movement, and he even bid on more real estate, despite being past due on payments to Ramirez for the Lepe farm. And amazingly, despite Johnson’s failure to pay on time, Ramirez claims that he was working on other business deals with Johnson:

“Mr. Johnson and I are working on other projects in Chile that are quite interesting that involve energy and ecological systems. There is much opportunity here in Chile and we intend to participate in the opportunities.” –Guillermo Ramirez in a letter to Josh Kirley, Dec 21 2013.

Del Real dangled a fortune in water revenue in front of Johnson’s eyes with the Andean Rio Colorado project and Johnson had to have it. Water is the new oil, don’t ya know.

In April 2014, Johnson traded a 50% stake in IGG, which he should never have had, for a 51% stake in Rio Colorado (or so he thought. See our post “Rio Colorado: The Con Man Got Conned.” ) On April 14 2014, the ownership and funding looked like this:

cap shares apr 2014

  • Johnson: 49.99%, $0.00.
  • Thornton: 0.01% (one share), $0.00.
  • Mario Del Real and family: 50%, $0.00.
  • Berwick: 0.0%, owed 39.5%, $0.00.
  • Equity investors: 0.0%, owed 21%, $1.75 million.

Meanwhile, Del Real in his new role as Chairman of the Board of IGG conducted a wild spree of writing, notarizing and registering a series of legal documents supposedly reporting on the many board and shareholder meetings he claimed he held. He expanded the number of shares of IGG from 10,000 to 1,000,000 and held all but the 5,000 still owned by Johnson. Del Real claims to have given 5,000 shares of IGG to engineer Fernando Antonio Hernandez Jara on June 20 2014. Hernandez supposedly was a contractor to GGC. Johnson, however, contests this, saying that Hernandez never worked for the project–sort of like Johnson, really.

The Recovery Team went public with the GGC fraud in August 2014.  In the face of our public exposure of Johnson’s perfidy, he was hit with an avalanche of refund requests, threats of civil and criminal litigation, and demands for payment of $2 million that he still owed Ramirez for the Lepe property. We had cut off his fraudulently induced income while his bills were piling up.

In desperation, Johnson turned to GGC investor, Jerry Folta. Folta, possibly thinking himself supremely clever, took advantage of Johnson’s impossible financial position and purportedly paid him $250,000 for 30% of IGG shares. Since Johnson had neither ownership nor control of the vast majority of the IGG shares, he gave Folta a contract called a promesa. This contract likely transfers 30% of IGG to Folta whenever Johnson is able to wrest shares from Del Real. Folta’s money did not go to capitalizing IGG but went straight into Johnson’s pocket. What he uses it for is anyone’s guess, but booze and gambling might be good ones. We can tell you what he definitely doesn’t use it for: paying employees. They have been reporting him to the labor board for months.

New information as of Aug 23, 2017. Folta’s fraud case against Del Real, as well as all other cases involving GGC, has been included in the criminal  investigation by the white collar crime prosecutor for the Republic of Chile. In Folta’s petition to be a victim of the GGC fraud, his lawyer included the contract mentioned above, which was not a promesa, as Johnson said, but a purchase and sale agreement. The dollar amount of $250,000 is in the contract, however, no proof of payment was provided.

By the time of the Folta contract on October 27 2014, GGC investors had paid $10.05 million. The real estate that GGC owned we generously value between $5 – 6 million. What a deal for Folta. Looks like he has his fellow investors’ interest at heart, doesn’t it? The ownership and funding looked like this:

cap shares nov 2014

  • Johnson: 0.49%, $0.00.
  • Thornton: 0.01%, $0.00.
  • Mario Del Real and family: 99%, $0.00.
  • Hernandez: 0.5%, $0.00.
  • Berwick: 0.0%, owed 39.5%, $0.00.
  • Equity investors: 0.0%, owed 21%, $1.75 million.
  • Folta: 0.0%, owed 30% some day in the future—maybe, purported $250,000.

This is how the situation stands as of October 2017. We’ve created a graphic of all the changes detailed in this post.

GGC Capital and Shares For the pdf version, click here.

shares capital ggcshares capital ggcYou might have noticed a pattern. From the very beginning, everyone who has owned shares of IGG has paid not one thin dime for them.* And everyone who has paid money into GGC owns not one share. How’s that for a perfect record?

fgc logo with kj

By the way, these are the machination that we know about, but we would not be surprised to find that others are owed equity. For example, when cornered by an angry GGC investor who had put money into Rio Colorado and was demanding his funds back, Johnson said he would give him equity in GGC. How many others he promised shares, we can’t know.

Here’s one final twist to this saga. When Johnson was desperately looking for money to bribe Del Real out of IGG, he approached investor Josh Kirley and asked him for $1 million. In exchange for the money, Johnson said he would make Josh the protector of the New Zealand trust. Some how it must have slipped Johnson’s mind that the trust structure was incomplete, uncapitalized and had no relationship to IGG, the only Chilean corporation that owns assets. Hmm.

*One document for the transfer of 2,000 shares to Del Real says that he paid some trivial amount of money for them. We do not have proof that money changed hands, and if it did, it went into Johnson’s hands, not into capitalizing IGG.

The Shacks—Oops, We Mean Haciendas—of GGC

“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.

“For investors in the organic farm offering, the Inn at Galt’s Gulch and the Guest Hacienda represent steady additional passive income that will be distributed to the owners of the GGC organic farm as part of their monthly revenues.” Source: Ken Johnson in GGC Farm Program Overview part 1.pdf.

The following is an eyewitness account from a former employee.

In September 2013, Ken Johnson asked the farm manager to develop projections for the GGC farm products for the years 2014-2020. The farm manager was conservative with his numbers. His plan included investment in organic fertilizer and seed, a greenhouse, water flow and well improvements as well as revamped and new farm equipment. He was also adamant that a nursery for the new crops was needed and that a large expense in construction and staffing would be required. The projections showed small profits beginning a few years after the Johnson empty balloon rightimplementation of all the capital improvements.

The problem was that since all the farm investors’ funds went to Guillermo Ramirez for the prodigious land payments with late penalties, and also to the ongoing expenses of the unprofitable farm, there was no capital left for investment into the farm manager’s plan. When the farm manager expressed his opinion on the severe water deficit for the existing lemon orchard, he was promptly fired.

Also at that time, Johnson asked the sales staff for projections for renting the farm worker cabins, or the “haciendas” at Galt’s Gulch Chile. The plan was, in an area with limited choices for accommodation, potential GGC investors could come stay on the property while contemplating a purchase or looking to choose their residential lots. The guest cabins idea wasn’t a bad one, but in Johnson’s hands it turned out to be just another sales gimmick: “five star” rooms for guests to rest their weary heads after a hard day of motion sickness from sitting in a filthy Jeep reeking of moldy pooch. (Editor’s Note: For more on Johnson’s patented hospitality during sales calls, see our previous posts, “More on the Joys of Working in Sales under Johnson” and “Feedback on Johnson from a Potential Investor.” We are NOT making this stuff up.)

The Lepe/Las Casas property had four cabins that went through partial remodeling in preparation for the April 2014 Celebration, april celebration announcement on fbthat is Johnson’s disastrous sales event at GGC. The renovations didn’t go exactly as planned. A hurried effort at renovation into guest quarters was at best a haphazard affair, and ultimately a waste of yet more investor capital.

The cabins were never meant for rental accommodation at modern hospitality standards. They are built from a mixture of adobe, concrete, cinder block, cheap lumber and tin. Only one of them had indoor water access, three of them had exterior baths with no plumbing or sewage. The windows are small and don’t allow for much ambient light. The local carpenters contracted to remodel the cabins had enormous difficulty as the walls and flooring were uneven and out of square. In the end, only two of the cabins were habitable.

Two of the lemon orchard ¨investors¨ visited their respective cabins in April 2014 and commented that they were not exactly haciendas. They are small, dark and should be torn down completely. This was renovations on cabana 2after thousands of dollars had been wasted on a hasty, ¨smoke and mirrors¨ remodel of them. The cabins sat low among the orchard trees, with windowless walls blocking the views of the surrounding mountains. They were originally meant for seasonal farm hands, had been vacant for a decade, were infested with rodents and insects, and would have been the last project addressed by any prudent manager since the farm was starving for water. (Editor’s note: see our post, “How Do You Say Potemkin Village in Español?”)

Yet our imprudent manager, Johnson, touts these shacks in advertising materials as first class guest accommodations that can rent for $200 USD per night with maid and room service. Adding to this exorbitant claim, he said he can rent them at a 50% occupancy rate or more, with the  Agricola farm investors reaping large dividends from the rental income. He even installed Direct TV in the shacks without televisions and installed satellite internet in a cabin in Carén [El Peñon] that doesn´t have electricity or water—more Potemkin Village maneuvers for clueless libertarian “investors.”

The Recovery Team and orchard investors are still awaiting any accounting on the revenue from these shacks. Recently, farm workers were butchering rabbits in one of them, but we doubt they were paying $200 bucks a night. Late in 2014, all of the shacks’ uncomfortable, moldy wicker furniture was repossessed for non-payment by the vendor.

furniture repoLocal merchant Sr. Guillermo Gonzalez repossessing
his damaged furniture.

The Only Real Hacienda at Galt’s Gulch Chile

The main house on the Lepe property—the only real hacienda—also went through a hasty remodel. The majority of the effort was devoted to a 2,500 sq ft wooden deck spanning the entire rear of the house. The deck is quite impressive and wowed the celebration remyattendees, for sure, but what they didn’t know is that weeks were spent modifying the wooden steps and concrete landings so that a mangy, 17 year old dog could have easy access. Yes, GGC investors, the famous Remy cost you more than those nightly salmon dinners.

At least four building contractors have come and gone from GGC, not one of them paid in full for their services or expenses.

The first contractor for the deck installed pine ceilings in the main house before he was fired and eventually threatened by Johnson. The stone flooring and gutted bathrooms were never finished. Most of the lighting fixtures were removed and never replaced. The famous master suite where Johnson let weeks of garbage and soiled laundryLepe main house without doors pile up in the sauna tub and on the linoleum flooring wasn’t renovated. This rodent infested building is dark, damp and dated. Johnson had the large French doors removed— this was later blamed on the Recovery Team—and never replaced (see in this photo), exposing the house to the elements and allowing the many starving street dogs to roam about freely, urinating wherever. The mutts spent most of their time lounging on the wicker furniture when not hunting the peacocks.

The contractors shored up the shacks quite well, but if you go, plan on bringing your own water, maid, insect repellent, septic tank, furniture and a generator.

fgc logo with kj

Latin American Agriculture: The Trendy Investment Newsletter Reco

When everybody’s recommending a sure-fire investment opportunity, we should all be smart enough to run. Too bad we GGC “investors” weren’t. 🙁

The Lepe property has a working 100 hectare agricultural area with lemon lemon bins 2orchards and 7ish hectares of dead and dying avocado trees. This allowed Johnson to jump on the trendy Latin American agriculture investment bandwagon with his orchard and farm share program.

He proposed to subdivide the existing ag area into five 10 hectare lemon orchards and one 50 hectare plot. The smaller orchards were sold to individual investors, while the larger area that included lemons and dead avocado trees as well as uncultivated fields were to be deeded to a Johnson-owned corporation, Agricola y Comercial Galt’s Gulch SpA. Johnson would then sell shares of Agricola to investors, with a contract to manage the orchards for a percentage of the lemon profits, the remainder paid as a  quarterly dividend. The revenue was to go to improving the existing infrastructure and expanding the hectares under cultivation–remember all that excess water.

Read the projections for this farm venture here, here and here. (Split into three sections due to file size.) This whole document is worth reading, but one of our fav parts is Johnson’s bio:

“Ken Johnson, GGC managing partner, has an extensive background in the fields of  real estate, alternative medicine, and the environmental and Enviro-Johnsonrenewable energy industries. Mr. Johnson has worked with numerous high-profile Hollywood celebrities, such as Jay Leno, Ed Begley Jr., Larry Hagman and others on television and internet projects to educate the public and brand product lines in the environmental industry. He has worked as a consultant in real estate, renewable energies, asset diversification, investing and relocation around the globe.”

That’s quite impressive. Let’s see if we can decode that paragraph.

“Ken Johnson, GGC manager (currently squatter), was a flunky California real estate agent, who lost his shirt in the collapse of 2007-8. He’s read up on vitamins and now lives on a steady liquid diet. His gig prior to GGC and The Dollar Vigilante was with Enviro-Energies, where he fleeced unsuspecting customers by selling windmills that didn’t work. As part of the windmill scam, Johnson had his picture takenswann circle with Hollywood celebrities who were more than willing to lend their names without checking into the corporation first. (Sound familiar?) Chased out of California due to bankruptcy and tax problems, Johnson took up selling fraudulent passports, most notably in Paraguay, aka ‘consulting in relocation around the globe.'”

Read the FBI press release about Enviro-Energies and you’ll see where Johnson cut his teeth in the scam industry. Johnson’s KJ handcuffsbusiness plan with Agricola looks eerily similar to Rowan’s. The Agricola “prospectus” is a stream-of-consciousness irrelevancy that in and of itself may constitute fraud.

Johnson thought he couldn’t wait for the subdivision approvals to be completed before he started selling Agricola shares and orchards. He had an aggressive payment schedule to Guillermo Ramirez for the Lepe purchase hanging over his head and needed the money.

All the 10 hectare orchards sold, but only 30% of Agricola shares. Not many financial advisers would recommend buying shares in a kj contractcompany that owns nothing. The revenue from the farm program was split between Ramirez to purchase the Lepe property, and Del Real who stole roughly $1 million. Virtually nothing went to upgrade the farm.  Agricola stock was never delivered to the share buyers, and the only dividends paid were to the few people who bought shares on crypto-trade.

Agricola remains a paper company, i.e. no assets.

We were listening to Johnny Mueller’s Expat Files recently. He gave his opinion on Latin American ag investments. He said that theft will be a problem, and we can tell you he is absolutely correct. While at the farm, we witnessed the farm manager catching the pickers stuffing backpacks, pockets and truck compartments with lemons to smuggle them off the property. We calculated they were stealing at least 10% of what they harvested. The managers also told us that the trees along the highway are regularly poached.

So maybe that fantastic mango orchard in Panama projected to return 18% isn’t such a sure thing. And neither is a lemon orchard in Chile. *sigh*

fgc logo with kj

By the way, Johnson did finally submit his application to subdivide the ag area, a necessary requirement for him to complete the sale of the orchards. This was a straight forward process because it didn’t require a change in land use. The subdivision was granted within about two weeks and cost approximately $5,000. He did this as a public relations measure after we investors went public with his perfidy. He trots out this approval as proof he can accomplish something. Of course, it says nothing about achieving the residential master plan which was rejected when first submitted. Further, he has yet to transfer the orchard lot titles to the investors and Agricola. Do you think the transfer tax might have something to do with that?