Category Archives: dirty tricks

Galt’s Gulch Chile SA: In the Beginning There Was Fraud

Actually, there was fraud the whole time at Galt’s Gulch Chile, beginning, middle and end. But in this post, we’re focused on the kj jailbirdbeginning, because future convicted felon Johnson has yet again taken to social media (and probably to drink), posting this tidbit:

“So now I [Johnson] ‘promptly defrauded’ three GGC partners? Ok. You must be talking about the very bitter expat in hiding, John Cobin, his business partner, German Eyzaguirre, your close ally, Jeff Berwick. Apparently, you haven’t seen the signed and notarised (sic) dissolution of all business relations amongst (sic) these “partners”? Or maybe you have, and simply are choosing to misinform people about it? I go with the latter.”

When Is a Partner Not a Partner?

We have written about this episode before in our blog post, “When Is a Partner Not a Partner?” but we didn’t go into the specifics of how the partnership between Johnson, Jeff Berwick, John Cobin and Germán Eyzaguirre legally ended.

Recall that a company was established named Galt’s Gulch Chile SA, (see GGC SA constitution part 1 and part 2) and that Berwick and Johnson had agreed to pay their junior partners $250,000. As Johnson tells the story, after the partners had a dispute that he blames on Cobin, they all dissolved the entity, GGC SA, in November 2012, just before the first disastrous real estate purchase of El Peñon.

house at el penonThe house at El Peñon.

The truth is that Johnson, not willing to pay up, executed a plot to create bad blood and bust up the partnership. That he accomplished with ease, being his typical thoroughly objectionable and mendacious self. His next step was to dissolve the SA corporation.

However, he couldn’t get Cobin’s cooperation. Cobin refused to sign any dissolution agreement that didn’t include paying him and Eyzaguirre that $250,000, and since Johnson never paid, the dissolution didn’t occur at that time.

What Does Cobin Say?

According to John Cobin:

“The dissolution he refers to, might have been a non-compete covenant we signed (against my better judgment and only upon Germán’s incessant urging), which was only to become effective once he paid us, which he never did. So, that document was void or at least useless. There was no consideration ever given in exchange for that covenant not to compete. I do not remember the date. Germán [Eyzaguirre] was certain that if we moved in good faith and signed, it would be enough for Johnson to come to the table himself. He never did. Like everything else, Johnson lied and then took without upholding his end.” [Emphasis added–Ed.]

Independently of Cobin’s Ken Pinocchio Johnsontestimony, we knew that GGC SA didn’t meet it’s legal demise in November 2012 as Johnson always claims. How? Because we have documents that say so. See this email from GGC’s lawyer, Andres Chirgwin, to Johnson dated March 27 2013, especially this highlighted sentence:

“Our potential problems arise from the fact that Galt’s Gulch Chile SA is still in existence and has a shareholders’ agreement that it (sic) is valid and in force.”

Later on, there was a series of panicked emails that flew between Johnson, Chirgwin, and Berwick in the period leading up to the second disastrous real estate purchase in August 2013. Chirgwin was concerned that if  GGC SA weren’t dissolved, Cobin and Eyzaguirre would bring legal action against the successor GGC entity, Inmobiliaria Galt’s Gulch SA, once the entity actually owned something of value.

Smoking Gun

Chirgwin advised Johnson that as majority shareholders (70%) Berwick and he could dissolve the corporation without the consent and participation of their junior partners. Berwick and Johnson were essentially out voting them. This was accomplished on August 30 2013. Here is the document with Berwick’s signature.

Liquidation of Galt’s Gulch Chile SA

And here is the smoking gun email from Johnson to Berwick about that document:

Johnson’s Email to Berwick about dissolving Galt’s Gulch Chile SA

Clearly, since a dissolution document was needed and was executed without the junior partners on August 30 2013, there was no dissolution of GGC SA executed previously with the junior partners, as Johnson falsely claims.

What Does This All Mean?

Johnson always says that he’s just a misunderstood guy who trusted everyone too much and was taken advantage of at every turn. With our two posts, “When Is a Partner Not a Partner” and “Galt’s Gulch Chile: In the Beginning There Was Fraud,” we have put the lie to that tall tale.

Johnson was a con man from GGC’s very beginning, even with his first act as “managing partner,” which was theft. He defrauded his partners as we described. With them out of the way and using investor money sans a dime of his own, he bought El Peñon and later El Lepe by and for himself. Neither Berwick, nor the employees nor the investors knew this, that he was the sole owner of GGC, or how it had happened.

How’s that for a material omission?

Johnson has to continually lie about defrauding his partners to keep up the appearance that he’s just a colossal screw up rather than an abject fraud. Remember, he has three criminal cases against him progressing through the legal system in Chile.

One of the ways he does this is by calling himself “the founding partner of GGC,” meaning there is no other. Without partners, he hasn’t defrauded anyone of their ownership.

Too bad for Li’l Kenny we have documents and eye witnesses.

Social Media Blues

Here, we yet again dispel a Li’l Kenny Fraudster lie with documentation supported by an eye witness interview. Our recounting of the first Galt’s Gulch Chile fraud that Johnson perpetrated on his original partners stands.

We wonder exactly how many of Johnson lies we have to expose this way before the social media crowd figures out that Li’l Kenny Fraudster is a congenital liar and acts accordingly. Haven’t they ever heard the new old saying, “Don’t feed the troll”? *Ugh.*

Coward Johnson's new logo
Btw, about Johnson’s crack that Cobin is in hiding, John had this to say:

“I did not know that I was ‘in hiding.’ Bitter? Being unemployed for 31 months has been pretty debilitating and losing so much of my own money in trying to start our libertarian resilient community, but those things are hardly as grievous to me as having seen Richard, Frank, Jack and Steve lose money. They are all very good people, with good objectives, that ended up getting hurt. I know that Johnson enjoys seeing that happen. Nevertheless, no one can live with bitterness. I push on without it, as I hope that they do, and will help anyone I can that has a shot of imprisoning Johnson and recovering losses.”

And to those sentiments we add, “Ever onward.”

The 2nd Most Asked Question about Galt’s Gulch Chile

“I have nothing to hide… [sic] that is why I returned to GGC to oust the ‘rescue’ team criminals from the GGC property…” Future convicted felon Ken Johnson on Facebook.

“But if he is just a conman, why not run off with the money? And why waste so many man hours, and go through the stress of cleaning, planting and transforming the property?” –Joshua Harris.

Workaway “volunteer” Joshua Harris told us that he worked for 2-3 weeks at the Galt’s Gulch Chile farm in exchange for room and board. This backpacker, young and inexperienced, can’t understand why future convicted felon Ken Johnson didn’t just, as they say, take a powder with our bucks. This is the second most common question we get about the GGC affinity fraud.

In fact, FCF Johnson did run off with his tail between his legs and kj jailbirdloot in hand when two of the GGC Recovery members went to the farm to negotiate his departure. Reports were that after he voluntarily abandoned the farm, he fled to Paraguay. Wherever he went, he stole upwards of $630,000 in the final months of his tenure. This data were gleaned from investors’ wire receipts and doesn’t include any lemon sales he pocketed on his way out the gate.

Of course Johnson’s a drinker and gambler so some or even much of the money may have been scattered to the winds before he ran off, but he must have had enough to start over. It would have been difficult for us to find him, and even if we had, more difficult to drag him back to justice. Yet he returned. Everyone wants to know why.

Psychopaths Have Their Reasons

We reckon on two reasons. First, being a sadistic psychopath, Johnson wanted to get us investors back for daring to challenge him and take “his farm.” After all, he had stolen it, fair and square.

If Johnson were an honest man, he would have returned by simply walking onto the property and moving back into the house. We would have done nothing but ignore him.

That wouldn’t have worked for Johnson, though. To him, it was unthinkable to be ignored and irrelevant in his former kingdom. No, Johnson had to stick a red hot poker in our collective eye. He hired armed thugs to terrorize and threaten our employees, then re-installed his lackeys to run the operation.

The funny thing is we didn’t care as much as he thought we would. We investors were being bled dry paying the expenses of a money-losing farm. We were glad to be relieved of that pressure. Also, we then knew where to find him. So much for the red hot poker.

THE Reason: Play Acting to Stay out of Jail

The second reason, and the more important one, that we immediately deduced and announced to the investors was that returning to the farm was his only defense against our overwhelming criminal charges against him.

The quotation at the beginning of this post says it all. Johnson has to act as if he has nothing to hide. The only way to do that was to come back to the farm. His lawyer told him that his only hope of beating our open and shut case of defrauding 73 families of over $10 million is to pretend he’s innocent. So he returned and eventually cooked up the scheme of Li'l Kenny's handcuffshoodwinking young, gullible Workaway volunteers to renovate the buildings and do all the labor on the farm. They even grow the food for the next shift of  backpackers. Johnson’s out-of-pocket is minimal and he keeps the lemon sales that these dupes provide. He can then proclaim to the world, “See, I only want to build a community and give the GGC clients their due.”

Just a fly or two in that ointment. First, his current Workaway scam does not undo his past actions which are more than obviously fraudulent–unenforceable contracts, fraudulent marketing materials, no insurance or bond to protect investors, non-payment of vendors and employees of over $200,000, wire fraud, money laundering, etc, etc. Note that intent is not required to convict on  many of these crimes.

Second, unlike gullible backpackers, prosecutors and judges have seen it all before. Li’l Kenny Fraudster can play at being a stand-up guy all he wants. It really doesn’t matter. That orange jumpsuit will be waiting for him no matter what tricks he tries to pull off.

Coward Johnson's new logo
Btw, there was immediate confirmation that our deduction about Li’l Kenny Fraudster’s motive was correct. When we sent our email blast to all investors exposing his desperate strategy to beat the rap,  within minutes we received a rather crude and threatening email in return. We had hit the bull’s eye. Claro.

And what’s the most frequently asked question? Well, the obvious: How could you have been so stupid to invest in GGC?

We wish we knew…

Galt’s Gulch Chile Con Man’s Go-To Tactic–Projection

Johnson Revives his Bitter Feud with
Cobin and Freedom Orchard

Clearly, future convicted felon Johnson is getting bored with bossing around backpackers. Facebook is infinitely more enticing. Well, fantasy is always more alluring than work, ain’t it Li’l Kenny.

John Cobin

One of Johnson’s perennial whipping boys is John Cobin (right), his erstwhile partner in a former incarnation of Johnson’s Galt’s Gulch Chile affinity fraud. We discussed this episode in our blog post “When is a Partner not a Partner.”

Soon after Johnson sabotaged the first GGC partnership to part ways with Cobin–we suspect deliberately to save himself the $250,000 fee he and Berwick had agreed to pay–Cobin began his own libertarian real estate project right next door to GGC called Freedom Orchard. So began a feud between the two that rages to this day, each one calling the other a scam artist.

In fact, we have had reports from investors who were wise enough to eschew GGC, saying that one of their main reasons was Johnson’s trash talking about Cobin and Freedom Orchard. He spoke such venom, bordering on all-consuming hatred, that just a peak into such a level of psychopathy was quite enough for them. Phrases such as, “We’ll destroy Freedom Orchard…” come to mind. Clearly, Johnson forgot one of the primary lessons of Salesmanship 101: do not speak ill of your competitors.

We had and have no dog in that fight but were bitten nevertheless when Johnson spent many tens of thousand of dollars, $30,000 in one month alone, in GGC investor money for lawyers, first paying two firms to research suing Cobin for violating an unenforceable non-compete agreement, and later suing Cobin for libel. Johnson likely could not have been successful in the libel case because Johnson is, of course, everything Cobin said he is–a liar and a scoundrel–and far worse. However, Johnson, after pissing away our money, dropped the case, so we’ll never know.

We review this sordid history because FCF Johnson revived the feud on Facebook, the current forum from which he excretes his libel and lies. Recently, Johnson accused Freedom Orchard of fraud for selling lots on a property that Freedom Orchard didn’t own.

This charge piqued our interest. We know none of the particulars of Freedom Orchard and can’t say who did what to whom (!), nor do we care. However, with this accusation we find a perfect example of one of Johnson fav tactics that armchair psychologists refer to as projection.

Yes, friends, Johnson did exactly the same thing–he sold lots on a property GGC did not own.

Johnson signed a purchase and sale agreement for the Lepe property on May 13 2013. He and the seller, Guillermo Ramirez, signed closing documents on Aug 14 2013. Between those two dates, Johnson sold lots to 14 GGC investors for over $1.6M when GGC did not own the property.

Johnson also criticized Cobin and partners for not being able to make the payments on the land they had under contract. Funny he should mention that because Johnson couldn’t make the payments to Ramirez as agreed, either. Not only was Johnson unable to pay the final installment for Lepe, he was unable to make any of the payments on the property on time.

Now, that’s projection for you.

The Lepe closing document included a nine month payment schedule. As far as we know, Johnson didn’t disclose that to these 14 investors. He also didn’t reveal it to his sales staff, instead telling them that the property was free and clear.

From the August 14th closing through December Johnson was forced to pay $600,000 of investor money in penalties for three missed payments.  Then, facing even more penalties and getting desperate, Johnson defrauded an investor for $975,000 by having Ramirez write a letter saying that all payments were made in full with the exception of the final payment due in April 2014. This was a lying scheme the two concocted to get at that money, since the investor had made his purchase conditional upon all installments being paid through December 2013.

Now, many business people get in over their heads and can’t make payments. And our lawyer has told us it is legal to sell land held with only a purchase and sale agreement or with a series of payments due, or without the required zoning. So far, you might think that this is simply bkj jailbirdad management, and maybe that’s true for Freedom Orchard, we certainly don’t know. But we do know about Galt’s Gulch Chile and if you think that of Li’l Kenny Fraudster, of course you’d be wrong.

In Chile, to sell lots before they are lots, certain requirements detailed in the Urbanism and Construction Act have to be met. For example, the seller must buy a bond or insurance to protect the investor. Johnson, however, did not meet that requirement. That is a felony punishable by up to five years in jail.

Sadly for us investors, Johnson can be caught for only one felony for this particular crime. That is because the contracts Johnson used are not enforceable in Chile. Only one investor who had his lawyer write his contract, has an enforceable contract. Read more about Johnson fraudulent contracts in our blog post “We Should Change the Name to No-contracts-ville Chile.”

Johnson tops his mendacious screed with the biggest lie of all: that he doesn’t owe anyone money as witnessed by the lack of legal Ken Pinocchio Johnsonaction against him. Oh really? He has two lawyers suing him for $34,188 and $54,000. He also owed $71,281 to Chilean vendors, and nearly $100,000 to ex-employees.

For example, Johnson’s administrative assistant from El Salvador is owed $8,132.53 which is a chunk of change for a Salvadoran. She ended up homeless around Christmas 2014. We investors put her up at the farm for two weeks and then bought her a plane ticket back to her family.

Johnson also didn’t pay his farm workers for months, salaries or benefits. They took to grabbing the lemon sales money before he could get it. We caught them up when we took over the farm. Johnson was still not paying the Chilean farm workers after he returned and has 13 cases against him with the pension administrator (see here and here).

And of course he owes all of us investors money, $10 million, in fact. (Apparently Jerry Folta hasn’t demanded a refund.)

The only number lower than Johnson’s IQ is his credit score. So for him to say he doesn’t owe anyone money is a truly fitting end to this example of his psychopathic projection.

Coward Johnson's new logo

Btw, we’ve discussed Li’l Kenny Fraudster projection before. Check out our other posts where we exposed his Paraguay passport scam, his trashing of the Lepe property, his cutting down of protected trees… we could go on and on.

If there’s one thing you can be sure of when dealing with the Fraudster: whatever he’s accusing others of doing, he’s guilty of it himself.

Latest Galt’s Gulch Chile Scam–Free 1st-World Labor

We’re often asked the question, “What’s future convicted felon (FCF) Johnson doing now that the Galt’s Gulch Chile scam has been exposed?“

We’ve added a note at the end of this post. The “cultural exchange” website with no conscience is

He’s got two criminal cases against him in Chile, an FBI investigation into his illegal activities in the US and various civil actions against his previously owned corporations. He’s losing his public relations war Li'l Kenny's an empty balloon.against us investors, having been outed on, Borderless Podcast, The Jet Setter Show and Christopher His Facebook page is a pathetic showing. The best he can do is post pix of flowers, and recycle nasty lies about the Recovery Team for both his followers. He’s had over three years of living off GGC investors, and he’s squirreled away upwards of $2 million. Any rational person would have gotten out of Dodge. People always ask us, “Has he left Chile?”

No he hasn’t, because Johnson’s not a rational person. He’s still squatting on the GGC Lepe property, but he hasn’t been idle. He’s been pulling off his next scam.

Cultural Exchange with a Crook

There are quite a few cultural exchange websites, where first-world backpackers can find opportunities to travel on the cheap, working for room and board as they go. Sounds great at first, but the reality can be at odds with what’s promoted, especially if a con man is the host and the website doesn’t do jack to vet their members.

FCF Johnson’s latest scam is posing as the owner of Lepe and convincing backpackers that working for him for free is a Chilean cultural exchange. Here’s a snippet from his host page, essentially an ad for indentured servants:

“Large Organic Farm – A Work In Progress – Fun [Volunteers] – Fun Times – Friendly Animals – Tons to Do!

“We have a beautiful project in central Chile, with a 250-acre organic farm, new organic greenhouse, and endless hills and valleys, nestled in the beautiful coastal mountain range. We can always use help with a long list of items that revolve around maintaining, expanding and improving our large organic farm, our new organic greenhouse (more are planned for construction as we expand the farm an additional 30 hectares), our beautiful organic garden and completion of our remaining guest haciendas…among a few other things. The project has 4,500 hectares of land, with trails for hiking, mountain climbing, horseback riding, etc. There is a small river, swimming holes, etc. a short walk from the haciendas. We have a swimming pool that was recently cleaned by [the cultural exchange volunteers] and is now regularly used by our [volunteer] guests after a day of working on various projects.”

Cultural exchange volunteers sorting lemonsThis photo was taken within the last month by a “cultural exchange volunteer” at GGC. Johnson is on the right, showing a peace sign to the people he’s scamming. Last we knew, SII, the Chilean version of the IRS, was prohibiting Johnson from selling lemons due to his flagrant violations of tax law. We wonder what SII will do when they see this pic.

Idyllic, ain’t it? But wait, there’s more…

“I am fairly new to the [cultural exchange] program, and have had a lot of inquiries. Myself and our full-time workers here have met some really nice people whom [sic] have come to stay with us and are staying with us now. It’s wonderful to meet people with a passion for organic food, thoughtful living and an eagerness to help others who share these passions. [Lay it on thick, Li’l Kenny.] I’m not the most organized person with the [cultural exchange] program so far, but we have some great [volunteers] who have stepped up to help others out when they arrive and also with finding the right things to help out with while here. I’m a believer in ‘the more, the merrier’, and tend to be a bit of a wall flower in larger groups, as I tend to generally just soak up the atmosphere and chill after a long day of dealing with architects, attorneys, produce buyers, errands, and more. I guess most ‘introverts’ can relate to this.”

Let’s translate for our little wall flower. He gets between 20 and 30 suckers at a time to come to Lepe, tells them generally what he wants done and then disappears to drink and watch internet porn while they work. These volunteers even do all the cooking and cleaning, picking the veggies for their meals from the garden that’s the result of the work of previous suckers–oops! we mean volunteers. We guess most introverts can relate. We know all swindlers can.

before and after signs to hide GGC fraudJohnson likely removed the Galt’s Gulch Chile sign at the entrance to the Lepe farm to make sure that the “volunteers” don’t do an internet search and stumble upon his fraud.

We’ll spare you the part about Johnson’s often mentioned plans for an animal sanctuary. It brought tears to our eyes.

In reviewing the exchange’s website, we found that their terms and conditions explicitly state their program is for cultural exchange only:

“[Our website] is NOT set up to provide or replace employment opportunities. We will remove hosts that we deem are not providing cultural exchange or educational possibilities.” [Emphasis theirs.]

At the same time that FCF Johnson has all these ‘volunteers” not only performing farm work, but also apparently renovating the various buildings that he left in a shambles, he has NOT been paying the few Chilean workers who are left at the farm.

Here’s more from Johnson’s ad:

“Any [volunteers] interested in taking on, or creating, a project that fits their life goals, career skills, or dream job, are welcome to talk with me and create a new project for the farm, eco-tourism, hospitality, bio-diversity, marketing, etc. I’m a firm believer in those who put their heart into something being rewarded from and for it…and who knows…maybe you will want to stay and create your own business here, based on taking care of our environment, growing great healthy food, teaching others, etc.”

Rather than a cultural exchange opportunity, this sounds like a con man using every fad currently  in vogue with first world backpacking types to try to sucker these well-meaning people into being his slaves. Unfortunately, it appears to be working.

Clearly, this exchange website did absolutely nothing to vet Johnson, including review his ad which violates their terms and conditions. They certainly didn’t verify his ownership of the farm–since he doesn’t own it, how could they? To be fair, a determined con man, which of course FCF Johnson is, could easily fake documents. Nevertheless, a quick review of his ad should have made them concerned.

The cultural exchange program’s terms and conditions also state that “all the hosts agree to maintain and update information in their account making sure it is accurate and truthful and complies with the laws of their country.” Since Li’l Kenny didn’t hold up this part of the agreement, we thought we’d help him. You know, he is really busy with lawyers and architects. We contacted the website to inform them that:

  • Johnson is a con man who defrauded 73 families of $10.45 million,
  • he’s squatting on the farm, i.e., he’s not the owner,
  • he doesn’t pay his Chilean workers,
  • he didn’t pay his American workers,
  • he doesn’t work with the volunteers, according to his own description and some volunteer comments. They appear left to their own devices,
  • there’s no cultural exchange to speak of with Chileans, and
  • he’s likely violating multiple Chilean laws–immigration, labor, social security, tax, etc.

 They removed his host page. 🙂

Coward Johnson's new logo Btw, we took the liberty of contacting all the other online exchange programs to inform them that FCF Johnson may be applying for host status now that his current situation has ended. They are on the look out for him, including under pseudonyms.

Maybe we should have a contest. Who can correctly predict Li’l Kenny’s next scam? We know there is one. As Professor Harold Hill said to Winthrop in The Music Man, “I always think there’s a band, kid.”

FINAL NOTE: We did not disclose the name of the “cultural exchange” website since we felt that their blocking Johnson was really stand-up and didn’t want them to suffer any negative publicity. That has now changed.

About one month after having his host page taken down, Johnson submitted a new host page under a pseudonym. We were checking for this, identified his new host page immediately and contacted the cultural exchange service asking them to block him again. Either they are terribly naive or in cahoots with Li’l Kenny Fraudster, because try as we may, we can’t convince them that this new host is in fact Johnson.

The website is They are violating their own guidelines, supplying free labor rather than a cultural exchange, and aiding and abettng Johnson in violating multiple Chilean laws. They clearly don’t care about the safety of their volunteers since they have no problem connecting them with someone who has committed assault on his co-workers, and who hired Mafiosi to terrorize Chilean workers.

You might want to contact them and tell them what you think of them.

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?


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.

YouTube Preview Image

(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.
fgc logo with tag line

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.

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.

GGC Recovery Team Logo

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.

fgc logo

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.