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.
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]@galtsgulchchile.com
Sent: Wednesday, July 17, 2013 9:16 AM
To: GGC_Ken Johnson
Cc: Two other Account Managers; Andres Chirgwin (project lawyer); email@example.com (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.
[Account Manager’s Name]
Galt’s Gulch Chile US toll free: 800.363.xxx ext. xxx
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?