Whenever the equity investors asked for their shares to be transferred to them, Johnson gave the excuse that the off-shore corporate structure wasn’t complete and that he had to have various people help him develop a tax efficient strategy first. But then he never facilitated the development of that strategy.
Of course, the whole time he was giving excuses, the lawyer who wrote the following account was emailing, advising him to complete the original, off-shore structure, or there would be problems for the investors.
This is a perfect example of the Johnsonesque package: abject incompetence, constant lies, passive-aggressive stance, pitting people against each other, and manufactured crises, all wrapped up with a blame game bow.
Monday, March 3, 2014
I met Jeff Berwick in a Panama conference where I was a guest speaker on trusts and New Zealand entities. Jeff later instructed me on advice relating to Galt’s Gulch. He told me that I would be obtaining instructions from his partner, Ken, and to deal with him. Now at this point I should add that I am an avid fan of Ayn Rand and her philosophies, especially Atlas Shrugged, so I was quite excited at the idea of the project, not that it’s new but its execution would be interesting. My initial instruction was to suggest a structure. The structure I initially suggested was as follows :
a) A New Zealand trust with a New Zealand corporate trustee would manage the project (the corporate trustee was to be the company we have now incorporated called Galt’s Gulch Trustees Ltd). I shall call this GGT and shall refer to the corporate trustee and trust as one entity.
b) GGT was to be the managing partner of a New Zealand incorporated partnership, the investors would form their own foreign companies or trusts and would come in as limited partners. This would for tax purposes in their country deem them as simply passive investors and not having control. Under New Zealand law a limited partnership formed in this way pays no tax on foreign sourced income so the structure is zero tax rated.
c) The limited partnership would own the Chile corporation via shares.
These suggestions were subject to detailed tax advise from competent Chilean counsel because the idea was that the New Zealand limited partnership would lend money to the Chilean corporation and remit profits via dividends, there is a double tax treaty between New Zealand and Chile which makes this favourable for tax purposes but I needed advice from the Chilean end. DESPITE REPEATED DOZENS OF REQUEST THIS NEVER HAPPENED. KEN SIMPLY IGNORED MY NUMEROUS PLEAS TO OBTAIN CHILEAN COUNSEL’S ADVICE AND PROCEEDED ANYWAY DESPITE MY WARNINGS.
I established GGT and gave Ken a nominee director without checking his background because I had met Jeff and because Ken assured me he would follow my advice. I established a solicitor’s trust account which was directed by Ken. I sent the trust’s paperwork which Ken never completed and he still has not signed to this day despite the fact that in the absence of a trust GGT is liable for full NZ taxes.
Li’l Kenny Fraudster’s Manufactured Crisis Tactics
When the corporate trustee, GGT, was established Ken called me in a panic and told me that he needed my help in “saving the land” because other buyers were going to grab it, he said he needed me to find a Chilean lawyer immediately. I had a lawyer who was a friend in Argentina (he is no longer a friend because of Ken) his name is Daniel and he was an offshore specialist that also had worked for the Chilean football team which I thought could have been beneficial. Anyway Daniel dropped all his other work flew to Chile to save the deal. His only brief was to save the land at any cost and to assist in locating Chilean counsel.
Li’l Kenny Fraudster’s Blame Game
Daniel saved the land but later Ken blamed him for not checking the land for mining rights. That was never his brief and Ken knew that. Ken tried to play Daniel off against me for some paranoid reason and never informed me of what Daniel was doing and vice versa and the whole thing in Chile turned to custard. Ken refused to pay Daniel but I specifically wrote to all parties that I did not wish to be involved in the fee negotiations.
Anyway, Ken started threatening Daniel with criminal sanctions and apparently told Daniel bad things about me.
Ken then later transferred funds from New Zealand into the name of the Chilean lawyer Ken had appointed contrary to my advice. The money was frozen for money laundering and we had to work hard to release it.
Li’l Kenny Fraudster’s Passive-Agressive Tactics
Ken was sent numerous emails saying he needed to work out a proper tax structure and that he needed to establish proper title of the Chilean land into parcels for the investors, to have an investors agreement (partnership agreement), proper accounting and audits, etc. I must have sent these requests over a dozen times. KEN IGNORED MY ADVICE AND THEN STARTED TO BLAME ME FOR NOT PUTTING A STRUCTURE IN PLACE.
After substantial efforts and complete frustration I advised Ken that there was a strong possibility that he could be sued for his negligence and told him I no longer wanted involvement. I wanted either Jeff or Ken to appoint one of their persons as a director and leave me out of it as I saw nothing but a mess. At that point I was informed by Ken that Jeff was now a bad person and that I should not deal with him. Unfortunately, I could not do this as Jeff had initially instructed me and therefore Jeff and Ken were both my clients.
So here we are. Sorry this seems rambling. I personally feel your money is seriously at risk and that unless you take action and put in a serious management and serious controls everything will be lost. I am happy to assist but will never again have anything to do with Ken. He has insulted everyone I know (needlessly) and lied almost about everything and I am happy to say that to his face. I would love to send you emails confirming the fact that I advised him of all the risks he is facing in this project and how to mitigate them initially and he ignored this. My view is that the investors are in a mess solely because of him and he is a walking landmine. [end]
By the way, note that the lawyer referred to future convicted felon Johnson’s panic to “save the land because other buyers were going to grab it.” Johnson said the same thing about the Lepe property. We can only wish. We have never found any evidence to support Johnson’s claim. To the contrary, both properties were over-priced white elephants that nobody else wanted. Their best use was in service as a real estate affinity scam. Claro que sí.