Category Archives: faq

Ken Johnson Social Media Lies Exposed Again

The con man of Galt’s Gulch Chile, Ken Johnson, was to appear in Chilean court on December 12 2016 for a hearing on the felony cases against him Future convicted felon Ken Johnsonfor defrauding 73 families of $10.45 million dollars. Johnson, however, as was no surprise to us GGC victims, didn’t show up in court. His lawyer claimed that he was called away to the USA due to his parents failing health. The ambulance chaser showed as evidence Johnson’s boarding pass for a flight to Mendoza, Argentina. Reportedly, everyone in the court room knew his excuse was a lie, since Mendoza has no flights to the USA. Despite the obvious contempt Johnson showed the Chilean court, the judge continued the hearing until January.

Here’s a link to the Curacaví El Mauco article about the hearing.

Ken Johnson’s Fraud Case to Be Made Official Imminently

Ken Johnson is currently a delincuente prófugo, unofficially as of yet, but the official status is coming. Wherever his is, we’re sure he hasn’t found a new scam and is getting bored, because he’s been posting on a libertarian forum again, attacking Jeff Berwick and lying about GGC.

His latest Facebook post, when Ken Johnson Pinocchiodeconstructed (below), is somewhat informative, at least to demonstrate his perfidy. As always, Johnson takes a tiny bit of truth, wraps it in compounding lies and spews it out everywhere he can, like the psychopath he is. His tactics are always the same: accuse everyone else of his very crimes and sit back to watch them scramble to defend themselves.

The trouble for Johnson is, we aren’t scrambling. Besides the fact that he’s so transparent, no one is listening to this grifter, anyway. He’s like a stray dog howling to the moon. The people with the power to put him behind bars pay no attention to his howling.


Johnson’s Facebook Post Deconstructed

Li’l Kenny Fraudster wrote: On December 12, 2016, Galt’s Gulch Chile was violently raided by 20 armed men, lead by Mario Del Real, a Chilean real estate swindler and associate of convicted felon EJ Lashlee, Josh Kirley, Thomas Baker, and Catharine Cuthbert. Del Real, and his cohorts, shot at and physically attacked the workers of GGC.

FACT: None of the innocent people libeled in this mendacious sentence have any relations with Mario Del Real. Del Real is Ken Johnson’s partner in crime, and conned Johnson out of his stock in the real estate holding company for Galt’s Gulch Chile, Inmobiliaria Galt’s Gulch, proving the ancient adage there is no honor among thieves. From August 2014 till January 2015, Mario Del Real tried to extort the GGC investors no fewer than five times. We repeat, we have no relations with Mario Del Real. Grifter Ken Johnson does.

LKF: After tying up some of the workers, Del Real then threw all of them into the street and ransacked their homes (our workers have lived on GGC land for many years), along with the buildings, farm, and land, of GGC. Some of these crimes were caught on video by witnesses, and have recently been presented as evidence of these crimes. The local prosecutor has recently been removed from involvement with these crimes and we hope to make sincere progress with the formalization and convictions of those mentioned above for a long list of crimes against GGC and our honest clients.

FACT: The local prosecutor, Cristian Cáceres, has not been removed from the fraud and other felony cases against Ken Johnson and Mario Del Real. He has been joined in that position by a prosecutor from the complex crimes prosecutor’s department– analogous to white collar crime–for the country of Chile. In other words, the government of Chile has added to its investigation and prosecution of the Galt’s Gulch Chile scam perpetrated by Ken Johnson and Marion Del Real.

LKF: This violent entry and attack of December 2016 was nearly identical to a violent entry and attack carried out on GGC property in October 2014, by Del Real, Kirley, Baker, Lashlee and Cuthbert. Shortly after their violent attack in October 2014, they retained hostile possession of GGC’s farm, buildings and land.

FACT: This is an abject lie. The people named committed no violent act of any kind. The truth is that Johnson, realizing the jig was up on his fraud, fled the farm to avoid the investors out of fear. Johnson voluntarily abandoned Galt’s Gulch Chile and the farming operations in November 2014.

However, in April 2015, Johnson hired four armed thugs to terrorize the investors’ employees at gun point and remove them from the property. This raid by Del Real is therefore reminiscent of Johnson’s violent raid of the farm 20 months earlier.

LKF: While holding hostile possession of GGC’s land, Kirley and Del Real entered into a private arbitration process with one another in March 2015 in order to obtain a favorable financial ruling for Kirley, so that Kirley and Del Real could then attempt to force the sale of GGC’s land assets to pay Kirley’s and Del Real’s arbitration ruling, and to attempt to purchase GGC’s assets at auction.

FACT: All arbitrations are private. There is nothing nefarious about that. Josh Kirley’s contract with GGC stipulates that disputes are to be resolved via the arbitration center at the Santiago Chamber of Commerce. The arbitration was completely lawful.

FACT: Kirley has no relations with Del Real and has met him only once through Ken Johnson at the GGC farm.

FACT: Josh Kirley’s arbitration was to recoup his “investment” in GGC since the project is a fraud. The only assets that GGC holds are the two parcels near Curacaví. To pay Kirley’s refund, the parcels will be auctioned, as is required by law. Again, there is nothing nefarious about this. To the contrary, this is how the system is supposed to work. Johnson is 100% at fault in this situation since he broke his contract with Kirley.

LKF: These hostile actions in October 2014 occurred three weeks after GGC obtained subdivision approvals and shortly before GGC was to complete payments on its land and water assets.

FACT: Johnson never obtained the full subdivision approval for the GGC project. He received a preliminary approval for the subdivision of the orchards as orchards, ie, the purpose of the land had not changed. Further approvals are required by the Metropolitan Region of Santiago for which Johnson has never applied.

Yeah, About Those Contracts…

LKF: 80% of GGC’s contracts with clients would have been completed in late 2014 had these parties not sabotaged the project in a violent and seemingly criminal manner.

FACT: This is a completely misleading statement. Johnson is referring to the contracts signed by investors who bought shares of a farming operation, Agricola Galt’s Gulch. Nearly everyone who bought into Agricola signed three contracts, making the number of contracts mentioned here appear to represent the interests of the vast majority of investors. In fact, only 16 of the 73 investors held contracts with Agricola, totaling just under $1 million, or less than 10% of the funds investors poured into the GGC fraud.

Five other investors signed contracts to buy 25 acre orchards, but their contracts included residential lots, for which there are no approvals, and loans to GGC. The same is true for several of the Agricola investors, that they hold contracts for residential lots and/or loans. Combining the two groups of investors, fewer than 30% of GGC investors could have had maybe one of their multiple contracts satisfied, if  the subdivision approval that Johnson obtained for GGC were completed. Again, the approval was not completed.

There was simply no way Johnson could ever make good on any of the contracts outstanding. The project was stalled due to Johnson being defrauded by Mario Del Real, Johnson’s mismanagement, his embezzlement and his inability to find more suckers. See our post, “Why Did GGC Fail So Spectacularly, So Fast” for the details. The GGC fraud collapsed by June 2014, while the investors took over the property in November 2014.

LKF: Kirley, Baker, Cuthbert, Lashlee and anarchist conman, Jeff Berwick, have been in collusion with Mario Del Real since early 2014, and possibly late 2013.

FACT: Kirley, Baker and Lashlee met Mario Del Real in mid or late 2014 and each met him only once. Cuthbert has never met Mario Del Real. None of the people mentioned have any relationship or dealings with Mario Del Real of any kind. This is utter fiction. Jeff Berwick has never met Del Real, and didn’t even know who he was or what is role in the GGC fraud was until some time in 2016.

On the other hand, Johnson brought Del Real into GGC affairs and is currently colluding with him to thwart investors efforts at restitution.

LKF: They have zero care about the ideas and beliefs about organic farming, peaceful living and other positive aspects of GGC.

FACT: How would Johnson know any of this about us? He doesn’t know us.

Peaceful living? Positive aspects of GGC? Being an affinity fraud, there are no positive aspects of GGC.

There is no organic farming. Certifications were never completed and the promised farming project was always a total fiction.

More importantly, no one would ever refer to Johnson as peaceful. He has physically attacked his co-workers and employees on several occasions. He also repeatedly held his Chilean employees at gun point while interrogating them and while filming videos. We hardly consider that peaceful.

LKF: We intend to win in the courts against these highly unethical and dishonest people and we intend to complete GGC for our honest clients, without this corrupt group that has aided Mario Del Real and Pamela Del Real with a long list of crimes, dating back longer than three years now.

Good luck with that, Li’l Kenny Fraudster. You can’t win in court when the documentary evidence and eye witness testimony is piled sky high against you.

Coward Ken Johnson new logo

Btw, Johnson also posted his typical, crazy mendacious screeds at Liberty.me. He told a new lie there, that he has never turned anyone into government agencies. He was trying to make himself appear to have libertarian principles to gain sympathy on that forum.

The facts are just the opposite. Johnson has:

  • harassed former employees multiple times by submitting complaints to the police and the PDI (Chilean equivalent to the FBI.)
  • reported Berwick and one of his friends to the Canadian authorities.
  • repeatedly reported John Cobin to the Chilean authorities and even sued Cobin and Cristian Jorquera, the owner of the local newspaper, for libel. He also paid two law firms to explore suing Cobin for breach of a non-compete agreement. Paying lawyers to pursue Cobin wasted nearly $100,000 of investor money.
  • reported Mario Del Real to the PDI and has two felony cases against him in the Chilean courts.

We have the documentary evidence for all his actions above, including some of Johnson’s own videos. !?!

One Last Note on the Criminal Cases

The January hearing to make the felony cases against Johnson official was again postponed to give the  new prosecutor assigned to the GGC fraud case time to prepare his team. We will announce the new hearing date when this information is available.

Galt’s Gulch Chile Investors Win Another Legal Battle

Turn of the Screw: GGC Recovery Wins Appeal, Turns Up Heat on Con Man Ken Johnson

Last year, the Galt’s Gulch Chile Recovery Team, using Josh Kirley’s contract, entered into arbitration with Inmobiliaria Galt’s Gulch to receive restitution and penalties based on its inability to fulfill its obligations.

On May 18 2016, the arbitrator found in favor of The GGC Legal Fund and awarded us a $1.3 million claim on Inmobiliaria Galt’s Gulch. Inmobiliaria GG then appealed the decision.  The basis for the appeal was that the arbitrator showed gross negligence and immoral behavior with his decision, a ridiculous claim but the only avenue open for an appeal.


Mario Del Real

Chilean Swindler Mario Del Real
Is that a smile, or a grimace?


On November 17, the Appeals Court published their decision. The justices rejected Mario Del Real’s challenge to arbitrator Walker’s finding in favor of the legal fund. The award of $1.3 million in restitution and penalties stands.

We can’t overstate the importance of this decision. Not only will we have a substantial lien on the GGC properties, but the basis for the arbitration award and the subsequent Appeals Court ruling will bolster our criminal cases.

In his appeal, Mario Del Real representing GGC stated that former developer Ken Johnson was not the legal representative of Inmobiliaria Galt’s Gulch when he signed Josh’s contract and accepted his funds. Both the arbitrator and now the Appeals Court  reject that this invalidated our claim of restitution. The decision reaffirms that as an agent of Inmobiliaria Galt’s Gulch, Johnson represented the company.

In addition to this arbitration, The GGC Legal Fund has a criminal case against Johnson based on Josh’s contract. We are accusing Johnson of a felony violation of the Urbanism and Construction Act when he did not purchase a bond or insurance to protect Josh’s investment as required by law. Johnson will likely claim that he was not the company legal representative and therefore not responsible for buying the insurance or bond. That defense was just blown out of the water.

Here is the link to the text of the Appeals Court decision. Note the final sentence:

“Por estas razones, se rechaza el recurso de queja interpuesto en lo principal de fojas 51, con costas, por estimarse que no hubo razón plausible para deducirlo.”

Translation: For these reasons, the appeal is rejected, with costs, because it is considered that there was no plausible reason to submit it. [Emphasis added.–Ed.]

In other words, the appeal was harassment, pure and simple.

GGC Recovery Team logo

Btw, Johnson has been spending his time lately posting all over social media that we lost our arbitration, and that all our criminal cases have been thrown out of court. Yet again, Li’l Kenny Fraudster proves to be an abject liar.

We are wondering when the “libertarian community,” who often claims to hate liars, will recognize this fraud for what he is and support the GGC Recovery Team. We’re not holding our breath.

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 Promises Documents–Again

Donnelly Challenges Berwick about GGC.
Future Convicted Felon Johnson Gets
into the Act.

Future convicted felon Johnson has set about flapping his yap yet again. This time it’s on George Donnelly’s FB page here and here. Yes, Li’l Kenny has found what he thinks is another sucker. The last time it backfired on him. See our blog post, The Cantwell Interview: Johnson Cornered.

Donnelly (above), donning the mantle of truth seeker, is on a crusade to prove that Jeff Berwick was a scammer with regards to GGC. Of course, Li’l Kenny Fraudster had to get into the act.


Donnelly the truth seeker? Well, not really. He said he’ll only investigate the Galt’s Gulch Chile Affinity Fraud if both Berwick and Johnson co-operate with him. Really? Since when has a criminal like Johnson ever co-operated with an investigation? In other words, this looks like nothing more than click bait.


We are of two minds about this. Of course we support anyone who wants to investigate GGC since we know that they will find that Li’l Kenny is a thief and liar. However, we are always against the internecine wars of libertarians. There are more important battles to fight against the powers that shouldn’t be. Investigation into Galt’s Gulch Chile does not have to be this way.

Be that as it may, Donnelly gave the Fraudster a podium from which he could displaying his modus operandi of lies and character assassination. Anyone with a whit of sense can tell whom (!) to believe by reading the endless, nauseating posts spewed out by this limacine con artist who is living off us investors still, as he takes in money from the farm that should be ours. Oh, but he assures us he’s too busy building a community to spend time on social media. Yeah, right.

Here are several examples of FCF Johnson’s ubiquitous lies.Ken Pinocchio Johnson

Li’l Kenny wrote, ” We’re presently winning all legal battles here in Chile, as those Berwick is aligned with continue to work with the Chilean real estate swindler…”

Fact: Johnson hasn’t won a single “battle.” All our cases and civil actions are moving forward. For instance, we recently won our arbitration for $1.3 million for his failure to uphold Josh Kirley’s contract. For proof check our time line post for May 18 2016 here (scroll down to the end). He’s calling that a win? If so, I hope he wins all his cases.

Further, we have absolutely nothing to do with the Chilean real estate swindler, Mario Del Real. At one point, we had to get Del Real’s permission to run the farm, but that was the extent of our association with him. In fact, we have a fraud case against him and his family, and an embezzlement case against his daughter in process right now. Again, check our time line for the facts and this blog post, Rio Colorado: The Con Man Got Conned. Johnson is the only one aligned with Del Real.

Li’l Kenny wrote, “It’s been a miserable experience seeing greedy cowards destroy what I was close to completing here, along with several other similar projects.”

Fact: GGC was never close to completion. It never got off the ground. There was no productive work done to turn the farm into a residential real estate development. NONE. All Johnson did was to piggy back on Berwick’s marketing and hustle unsuspecting libertarians to part with their money. And other similar projects? Where???

Li’l Kenny wrote, “The courts in Chile have dismissed all of the frivolous criminal actions against me.”

Fact. We have three criminal cases against Johnson, and none have been dismissed. All are going forward as we write.

Li’l Kenny wrote, “We were also busy this past year repairing and replacing all that the GGC “rescue” team stole, trafficked and destroyed here.”

Fact: We stole NOTHING. We destroyed NOTHING. As we documented in our blog posts, the “damage” to the property was all fictional. See:

Li’l Kenny Lies about “Damages” at GGC Farm
The Shacks Oops–We Mean Haciendas–at GGC

Also, the chattels we sold were owned by GGC, not Johnson and therefore legally under our control and management at the time of sale. The money raised was paid to the farm workers for their salaries and benefits, something that Johnson didn’t do. There are 13 cases against Johnson with the Chilean pension administration for failing to pay the benefits of his workers. Go here and here for a list of these complaints.

We could go on, but you get the picture. There is not one sentence that comes out of Li’l Kenny Fraudster’s mouth that’s true. Not one.

Just as he promised Cantwell that he’d supply documents, Li’l Kenny Fraudster has supposedly committed to delivering documents to Donnelly. Hey, George, don’t hold your breath.

Coward Johnson's new logo

Where did all the money go, Johnson? The accounting.
Who owns what at GGC? The legal documents.

We’ve been demanding this information since September 2014. Johnson claimed he wanted to be transparent and give us all the information. We’re still waiting two years later.

Btw, Johnson sold almost the entire Lepe house full of furniture and other chattels when he took over the property, yet the accounting for these sales has never been disclosed to the investors. We believe he dealt in cash, kept no records and he pocketed all the proceeds.

But hey, he’s building a community…

Sep 4, 2016–Johnson May Not Be the Only Fraud

Mr. Donnelly, a week after announcing his Truth Campaign, posted this screen cap of a conversation with Jeff Berwick and called off the project. Mr. Donnelly blamed the demise on Jeff, of course. We have a different opinion.

donnelly-berwick-screen-capClick on screen cap to make larger.

The Donnelly Truth Campaign began with Mr. Donnelly saying he would investigate GGC as an independent third party only if Jeff and future convicted felon Johnson cooperated with him, especially providing documents.

In other words, Mr. Donnelly never intended to investigate GGC at all. Bearing in mind that he is a graduate of the University of Chicago–Mr. Donnelly tells us so–consider the following:

  • Mr. Donnelly must have known that he’d never get FCF Johnson’s cooperation. Since when has a journalist gotten cooperation from a con man, especially one with three criminal cases against him pending?
  • Further, Mr. Donnelly must have known that with his taunting and obvious hostility towards Jeff this past week he was driving Jeff toward bailing on this “deal.” Would you want someone professedly biased investigating you?
  •  We contacted Mr. Donnelly to tell him that Jeff had few documents, had been kept in the dark by the paranoid con man FCF Johnson, and that our webpage had many of the documents he would need. Donnelly was wholly uninterested in the GGC documentation we have already made public. Hmm.
  •  FCF Johnson told Mr. Donnelly in an Aug 25 FB exchange that he would not disclose all his information. Also in that exchange, we learned that Donnelly and Johnson have been talking “for months,” yet Johnson still hasn’t cooperated with the Donnelly Truth Campaign. Why didn’t Mr. Donnelly announce that? Why did he only announce Jeff’s backing out?

Common sense says this does not add up. We submit that no one who is sincere, no one who is a true journalist would act this way. This seems little more than an exercise in click baiting, an example of the pestilence of social media.

Btw, we hope that Mr. Donnelly had the INTEGRITY to obtain Jeff’s permission to post the completely out-of-context snippet from what appears to be their private FB chat.

Publicly posting out-of-context, private communications is one of the more despicable practices of our internet age, don’t you agree?

Galt’s Gulch Chile Victim Psych: Curacaví Dreamin’?

We were listening to The Opperman Report the other day when we heard this GGC relevant observation:

Now, one thing that I’ve learned, in my work as a private investigator, especially now on the internet, I deal with a lot of people who get conned out of their money. Especially in these romance scams. I just had one woman recently, this woman contacts me and she says, “Ed, you know, I met this guy, he lives overseas, and he wants to send me a car. He told me to give him my bank account number so he could wire me some money. He never wired me the money. He said he’s sending me a car instead. Now I’m getting calls from this car transport/storage place, they want me to send them money or they’re going to charge me storage for the car. I never asked for this car.”

So I tell these women, I say, “Well, listen. First of all you’ve got to close that bank account, because now he has your bank account number, he can print out a check. Secondly, you need to make a police report. And don’t send these people any money. Stop communicating with this guy.”

So even though I tell them this, man, and they say, “OK, I did, I did, I did….”

“OK, so who did you make the police report with? I want to talk to the cop you made the police report with.”

“Oh well, I didn’t really make a police report.”

“OK, did you close your bank account?”

“No, I didn’t really close the bank account, but the bank is watching my account. They’re monitoring my account for me.”

“No they’re not. So, did you close your email account? Are you still talking to this guy?”

“Yes, I’m still talking to the guy.”

Because victims of con artists, they want to believe. They want to believe it’s true.[end]

We have found this phenomenon with future convicted felon Johnson’s victims, too. More than one GGC investor, when contacted by the Recovery Team, were angry at us for telling them they were conned, and defended Johnson. We believe they were angry because we were interrupting their dream. Despite the crazy, invalid contracts, lack of communication, missed land and loan payments, nonpayment of dividends, stiffed employees and vendors, the Rio Colorado scam, no zoning approvals, the total lack of any progress in building anything they still wanted to believe GGC was all true.

One of these investors was, of course, our dear friend, Jerry Folta. He accused us of name calling, lying, libel and having a hidden agenda. All the other investors looked at our evidence and came to their senses, but not Jerry. To this day, he is supporting fcf Johnson and claims to have paid him an additional wad of cash over his initial “investment.” Ugh.

Here’s another Opperman insight from that same podcast:

Now, one of the things I know about con artists is that when they are scoping out a target, when they are scoping out their victim, what they will do is, in the beginning, they will make a claim that is so outrageous, and so unbelievable, and if you don’t call them on it when they are saying that, now they know they’ve got a victim. Now they know they can walk all over you.

This also fits our friend Jerry. Jerry thought he bought a 25-acre lemon orchard with a “hacienda.” Having seen the marketing literature for that “investment”–and the “hacienda” (see blog post ”Capital Improvements: The Shacks—Oops, We Mean Haciendas—of GGC“)–we know that fcf Johnson was making “a claim that was so outrageous, and so unbelievable” that we’ve often said we wish we had the good luck to see that offer(see here, here and here) before we threw our money away on GGC. Even more amazing is that Jerry, well before the lemon orchard scam, caught Johnson trying to cheat him with an outrageous, unbelievable contract. In Jerry’s own words:

I was considering buying in and I asked Ken to send me the blank contract. As I carefully went through it I couldn’t believe what I sign here suckerdiscovered. I had to turn the pages back and forth several times to wind through the legal paths in the contract but it clearly spelled out that once GGC sold me the property it could unilaterally decide to buy it back and, then, set the price at anything the General Manager (Ken Johnson) wanted – even $.01. I immediately thought, “He’s trying to screw me!”–Jerry Folta in an email to GGC investors, Oct 2 2014.

So why did he go ahead and enter into a contract with this obvious swindler? Jerry decided that since Johnson was willing to change the terms of the agreement, this wasn’t fraud, it was just Johnson following bad legal advice. (!?!) We are NOT making this up. We fancy ourselves as amateur comedians, but we’re not that clever. Here’s more from the same email:

I rewrote the offending portions of the contract in a way the original language was left intact but deletions/additions/changes were made in red so it was clear what I wanted to change. I also included what I described as written “rationales” for the changes I was proposing so he would understand why I wanted the changes and could better determine if he agreed the changes were fair.

After a couple days rewriting Ken and I went through the revised contract start to finish. With explanation and discussion it took a good while and at the end I waited for the verdict. After a brief pause Ken said, “Ok.” Not a single modification, not a single change, not a single objection to what I had written.

The conclusion I came to was the attorneys wrote the contracts as attorneys are wont to do; with as much protection as possible for Ken since he was the one paying them. Attorneys are usually not businessmen and the unfortunate way it came out under those circumstances was not appreciated by Ken. Also, the contracts were written in spanish [sic] and translated so both culturally and linguistically there is a great deal of uncertainty built into the situation. Still, once Ken saw my suggestions he immediately accepted them and, in fact, made it clear on several occasions afterward that he appreciated what I did because the work I contributed made GGC better – especially for other shareholder investors. Although it’s easy from the sidelines to fault Ken for not doing a better job of managing the attorneys, in a project this big, this ambitious, this undeveloped – these types of situations really should be expected to occur on a daily basis.

Seems clear to us that Jerry really wanted to believe, and fcf Johnson absolutely knew he had a helluva sucker on the line. Coward Johnson's new logoBy the way, we’re always skeptical of the veracity of Folta’s retelling of the “facts” surrounding anything to do with Johnson, and certainly of his estimation of Johnson’s motives. Besides the obvious, that the information is second hand, passed from a congenital liar through a possible true believer,  we happen to know that these two collaborated on Folta’s tedious missives. How do we know? Because Jerry sent the following email message by mistake to the Recovery Team after he received one of our GGC Investor Updates:

Subject: Re: GGC Investor Update Nov 15 2014
From: Jerry Folta
To: Cathy Cuthbert

Ken:

Do you want to talk about a response to this?  If you’re going to reach a settlement soon it’s probably not necessary.  If we’re still fighting the good fight perhaps I should respond.

What do you think?

Jerry

Ja, ja, ja. Continuing an affinity fraud is “fighting the good fight.”

One final note: Johnson’s Chilean lawyers, fluent in English, said that Johnson wrote the contracts. His firm was asked to review what Johnson had written, usually at the last minute and sometimes after the contracts were signed. (!?!)

Li’l Kenny Lies about Damages at GGC Farm

pinocchioFuture convicted felon Johnson loves to take to social media and accuse the GGC Recovery team of “causing damages” and “looting” the Lepe farm. Sometimes we supposedly stole and/or damaged $1 million worth of we don’t know what, sometimes it’s $500,000. He has made videos with similar accusation that you can view at his GGC website.

His videos are a real hoot. In one, the most he can do is claim that there are damages [sic] to a rubber tree. We pruned it–oh, the horror! In another, he and Ramirez wander around the hacienda front yard talking about missing peacocks. In a third, he shows shots of the drained pool at GGC.

These trivial accusation–we hesitate to elevate them by calling them accusations, let’s just say trivialities–are all false and pale in comparison to the $10.45 million he has misappropriated or outright stolen from us investors.

The only charge to which we care to respond is that we stole property from the farm. In fact, we did no such thing. During our six months managing Lepe, registered legal documents showed that Mario Del Real was the chairman of the board and controlled the ownership of Inmobiliaria Galt’s Gulch, the real estate holding company, and that his daughter was the general manager. These are facts that Johnson has admitted.

In late October 2014, we asked Del Real’s permission to run the farm and he granted it. We then paid the back wages and payroll benefits of the farm workers that Johnson wouldn’t pay, and continued operations.

In the links below, we provide the spread sheets that the farm managers created and used to detail all the money earned and spent from November 2014 to April 20 2015. You will see that, not surprisingly, the majority of the expenses were for wages.

Income and expenses Nov 2014
Income and expenses Dec 2014
Income and expenses Jan 2015
Income and expenses Feb 2015
Income and expenses Mar 2015
Income and expenses Apr 2015

The Lepe farm is not profitable. The previous owner, Ramirez, neglected it for years. The trees are stressed from lack of water and from mineral deficiencies. The orchards produce only about one tenth of what a healthy commercial orchard would. In addition to the problem of poor yields and therefore pitiful income, we had ongoing expenses for repairs to the irrigation system that is aging and needs to be replaced, and for the replacement of a transformer that was stolen for the second time just before we took over operations. This transformer powered the pump for the main well.

It took approximately $23,000 per month to pay the employees and keep the lights on. This did not include the salary of our supervisor, Ken Carpenter.

Because the farm is unprofitable and the harvest for the period in question was slow in coming, we were forced to sell chattels from around the premise to pay salaries. These sales are in the above reports and total CLP $20.349.560 or approximately $34,000.

So, the Pinocchio of GGC was, as usual, off by more than an order of magnitude in his lie about how much money was raised by our selling the junk lying around the farm.

If you wanted to give future convicted Johnson the benefit of the doubt, you may have thought that he was in good faith trying to make estimates of these sales. You would, of course, be wrong. Since he took back the farm, he’s had access to all the farm records. Not only does he have these very spread sheets that you see linked on this page, he has all the original receipts, as well.

We really don’t care about Johnson’s lying posts on Facebook. We wonder why he does? We are sure the prosecutors and judges in his criminal trials won’t be swayed by this type of nonsense.

fgc logo with kj

 

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 instigated. 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.

By the time of this promesa in November 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 November 2016. 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.

Rio Colorado: The Con Man Got Conned

“I received the update Cathy Cuthbert sent out a couple days ago showing a preliminary contract between Ken and Mario Del Real for a company named “RIO COLORADO MINING AND EXPLORATION INVESTMENT COMPANY S.A.” This contract was never finalized but what’s important is it was to be a private agreement between Ken Johnson and Mario Del Rio. In my mind this is like looking at Ken’s dental records – perhaps mildly interesting but none of our business. As majority owner of Inmobiliaria Galt’s Gulch S.A. Ken has every right to sell his shares to anyone at any time for any purpose.” –GGC Investor Jerry Folta, in an email to GGC investors, November 2014.


The swindler was swindled; the scammer, scammed. GGC’s estafador had his stash filched. A sleazier sleaze bag absquatulated with a millJohnson empty balloon rightion bucks, all the shares, and the office furniture, too. Are we to be spared nothing?

Oh, the humanity!

Mario Del Real is a Chilean businessman (some say loan shark) brought into GGC by Johnson as a “fixer.” When their relationship began, Johnson’s bank account had been blocked due to non-compliance with the know-your-customer regulations. He needed a way for GGC to receive funds from investors and Del Real agreed to let him use his daughter’s personal bank account for that purpose.

Del Real convinced Johnson that he had gotten poor advice from his lawyers and that he could help him with various legal documents and with obtaining subdivision permits. He further advised Johnson to put himself and his children on the board of directors and to give the position of general manager to Del Real’s daughter, Pamela. John­son then sold 30% of GGC shares to the Del Reals and later increased their ownership to 50%. This second sale was for peanuts–$1.82/share making the IGG total valuation $18,000.

Ironically, the equity investors had been agitating for months for Johnson to fill the board of directors with investor representa­tives and to give them the equity in the project that he was con­tractually obligated to give them. What he denied his investors, Johnson gave to this Chilean crook.

The big heist occurred when Del Real sucked Johnson into a trap with his own company, Rio Colorado. This company owns a prop­erty called Los Andes, supposedly valued at $16 million being blessed with glacial waters for which nearby mining concerns would gladly pay millions of dollars per month, or so the story went.


Andean glacier, chile


At first, Johnson agreed to buy 51% of Rio Colorado for $8 million dollars; $8 million of which he did not have. (See here for Spanish, and here for English.)The money was to come from Rio Colorado water revenue. When that looked like it wasn’t going to happen, Johnson claims he cleverly proposed a stock swap between himself and Del Real—51% Rio Colorado for 50% GGC. (Chirgwin investigated the swap and provided the GGC Recovery Team this report.)


“[B]asically my first deal with Mario was for eight million cash, you know, eight million and some change. We were having dinner one night and I said, ‘You know Mario, I’m just going to pay you out of the water revenue. You know, you’re helping, you’re doing a lot of work for Galt’s Gulch and you’re helping out a lot. We can renegotiate the dollar amount and you can take the equal amount of shares I have in Galt’s Gulch,’ and that’s how it came about.” –Ken Johnson, June 29  2014, reminiscing over his dental records.kj contract


Of course, Johnson’s 100% ownership of GGC was fraudulent. He had a partner in Jeff Berwick and four equity investors who together should have had approximately 62% of the IGG, and Ramirez was given another 3%. No matter, Johnson signed the swap agreement that he didn’t understand since he hadn’t consulted his own legal adviser and cannot read Spanish. In addition, he convinced three GGC investors to pony up $100,000 each for their share of this sure thing.

We still don’t know exactly how much money changed hands along with the stock swap. We were told by two Chileans that at the signing of the swap agreement on April 15 2014, a backpack of $350,000 in cash was delivered, and that a second delivery of $250,000 in cash was made shortly thereafter. Further, Johnson was caught on a recording saying that he paid Del Real “about half a million bucks or whatever that total is.”

Let’s put this information into perspective with the GGC timeline, shall we? April 15 2014… Hmmm… Now, why does that date sound familiar?

Oh yes, that was right around the time Johnson was supposed to make the final $2 million payment to Ramirez for the Lepe purchase. Instead, he extended the final payment to Aug 15 2014, paid or accrued (we don’t know which) another late penalty to add to the over $1 million in fines he had already paid, and pulled off a killer deal for a mere $500,000–or $600,000 or whatever that total was–for a “shit load of value” in Andean water.

Those GGC investors bamboozled by Johnson to “invest” in Del Real’s pipe dream contributed $300,000. So where did the second KJ handcuffs$300,000 in cash come from? Likely it came from the same place that all of Johnson’s money came from since November 2012–us investors, from GGC, from the final land payment.

We know from our wire receipts that approximately $1,000,000 went into Pamela Del Real’s bank account and where it went after that, we don’t know. We have heard that former developer Johnson said on several occasions that the MDR handcuffsDel Reals stole it, or some portion. Further, we have documents showing that $120,000 was diverted from two GGC investors through Pamela Del Real’s checking account to Rio Colorado, authorized by Pamela’s signature. (One of these investors filed a criminal suit against Del Real in Chile on May 20 2015 for that theft.)

To add to the miasma of deceit, we’ve been told by a reliable source that Mario Del Real claims he received only $140,000 from former developer Johnson for Rio Colorado. But wait! in the farm office, the GGC Recovery Team found a piece of paper that appears to be Del Real’s accounting of former developer Johnson’s cash payments to him for those very valuable Rio Colorado shares. There were six payments totaling nearly US$280,000 en efectivo—that’s español for cold, hard cash. Del Real also claims he has documentation showing that he loaned CLP$35,000,000 (US$65,000) back to GGC.

According to Johnson, once the Del Reals were in place as the management of GGC and the GGC/Rio Colorado contracts were signed, Del Real blocked Johnson from fulfilling the contract requirements.


“[Del Real] interlocked the contracts which I told him I didn’t want to do, but he did, and basically the payments on Rio Colorado include the share issuance to him of 350,000 shares of Galt’s Gulch Chile, of Inmobiliaria, which equates to 35% of the company. And that’s fine, that’s what we agreed to, but I can’t make that issuance because his daughter and him (sic) are refusing to put the shares into my name like we agreed, because that’s not in the contract. So he’s basically trying to hold me hostage.” –Ken Johnson, June 29  2014. Uh, oh. Looks like a cavity in the #2 molar.


However, according to Del Real by way of lawyer Chirgwin, Johnson missed a $206,000 payment, and also breached an obligation to deliver bank bonds, both part of the swap agreement. Because of this non-payment, Del Real refused to complete the transfer of the shares to Johnson.

For whatever reason, as is stands now, the Del Real family is listed as the owner of record of 99+% of GGC, Del Real is the Chairman of the Board with his children as fellow Board members, his daughter, Pamela, is general manag­er and Johnson is out of luck, as are the GGC investors.

Johnson claims that all the documents giving ownership and control of GGC to the Del Reals are either forged or tampered with in some way, but his explanations are vague. We suspect that in many if not all cases, there is another explanation.


“What the fuck are you talking about, dude? You’re the one who drafted kj no hablothese agreements, I didn’t even… I hardly know what they fuckin’ say, for Christ’s sake.”

“Hey, your attorney, this is what they represented to me: I signed the contract, taking them on their word, I don’t know what the fuck I signed ’cause it’s in Spanish.”

–Ken Johnson, June 2014, recounting his conversation with Del Real about the Rio Colorado contracts. Root canal coming right up.


As we’ve said before, Johnson did not seek competent legal advice y no habla Español. Qué lástima. Qué horror. KOed.

The details of what really happened, we don’t know. How much money changed hands when? We’ve seen no evidence and likely there isn’t any. That’s what paying with large quan­tities of cash without receipts gets you. Don’t think that Del Real isn’t fully aware of this. What we do know is that three investors paid $100,000 each, two others had $120,000 diverted and none of them has anything to show for it–Johnson’s leitmotif. Where is the money? With Del Real? With Johnson? ¿Quien sabe?

By June 2014, Johnson was once again in danger of his fraud being exposed. In his panic he turned to investor Josh Kirley to bail him out, asking him to pay $1 million to become the proud owner of Rio Colorado shares–a payoff to Del Real to give over ownership and control of GGC. Josh wisely refused, then went public with Johnson’s perfidy.

fgc logo with tag line

Oh, by the way, you might notice that if Johnson hadn’t brilliantly negotiated crippling late penalties that ended up costing over $1 million and hadn’t cleverly given the Del Reals access to $1 million of investor funds, he would have had $2 million for the final land payment. But, then, he wouldn’t have had nearly as much high rollin’ fun along the way. 😉

Final interesting note: Pamela Del Real is only 26 years old. Quite a tender age to be the General Manager of a multi-million dollar real estate development, and convicted of embezzlement, ain’t it?

We Should Change the Name to No-Contracts-ville Chile

“It’s my dream to not have contracts in Galt’s Gulch, and to share a common bond of truth and integrity… and vision.”
–Ken Johnson


There were five types of contracts Kenneth Dale Johnson used to accept funds for GGC:

  1.  Heads of Agreement (HOA) (click here) for equity positions and residential lots to the first four investors referred to as “The Founder.”
  2. Promise to Purchase a residential lot coupled with a loan for investors called “The Second Round Founders.” (Click here.)devil contract
  3. Promise to Purchase a pre-sale lot (click here). The term “pre-sale” was used to imply special pricing because subdivision approvals had not yet been obtained.
  4. Farm Share Subscriptions, the sale of shares of Agricola y Comerical GG SpA and loans to Agricola for land purchase and improvements (click here). Some also include options on residential lots. Fifty hectares were to be transferred from Inmobiliaria to Agricola after subdivision of the orchards. These investors would own this 50 hectare farm through owning the shares and would be paid the profits of the farm through dividends.
  5. Promise to Purchase an Orchard (click here). These are five 10 hectare lots planted in lemon trees that were also to be subdivided from the agricultural zone.

The Heads of Agreement was new to us. According to Wikipedia, “A heads of agreement is a non-binding document outlining the main issues relevant to a tentative (partnership or other) agreement. A heads of agreement document will only be enforceable when it is adopted into a parent contract and subsequently agreed upon. Until that point, a heads of agreement will not be legally binding (See Fletcher Challenge Energy v Electricity Corporation of New Zealand [2002]2 NZLR 433).” This type of document may have been used because the corporate structure was not complete. The HOAs were supposed to be followed by a “comprehensive partnership deed.” This never materialized.

The “promise to purchase,” in Spanish “promesa,” is a preparatory contract by which two or more parties agree to enter into a future contract on a specified date and/or subject to the occurrence of an event. In this case, the future event that conditioned the execution of the promised contracts—a sales contract for a lot—was the subdivision approval of the land, the farm named Lepe/Las Casas.

Within these types of contracts, there are various versions. We stopped counting at 15. Our speculation about why there were so many versions of the contracts is that with time and feedback, Johnson was learning that his contracts were problematic, causing him to continually fiddle with the provisions.

One change is that later promesas had a provision saying the contracts are conditioned on “the smaller 10 hectare parcels legally exist[ing], through the approval of the subdivision…” (We wonder if this is an error. Johnson may have meant to say lots smaller than 10 hectares.) Early promesas don’t stipulate the size of lots that must be approved. The change may have been due to the difficulties Johnson was having in obtaining subdivision approval.

There are problems with most of the contracts, either in the provisions, or with how they were executed, or more precisely, not executed. Out of 73 investors, maybe 62 have these problems. The GGC Recovery Team attorney in Chile said that the vast majority of the ones he has seen are flawed.

Jurisdiction—Just Try to Get Your Money Back

Possibly the most significant problem is the jurisdiction issue with all contracts signed before October 2013. The HOAs claim the jurisdiction of London, UK. The remaining contracts claim the jurisdiction of New Zealand.

ukThe HOA investors bound by London jurisdiction paid their funds to the Bank of New Zealand account of attorney Greg Stewart, who forwarded those funds to Banco Itaú in Chile. There are no assets in London. The claimed connection to London is unclear.

Most of the other investors bound by New Zealand jurisdiction paid their funds to Banco Itaú in Santiago. There are no assets in New Zealand, nor were there any during the time that the majority of these contracts were written, although it appears that two residential lot option buyers sent their funds to New Zealand, similar to the equity investors.

The ostensible reason for the New Zealand connection—a corporatenew zealand structure of a limited partnership that would act as trustee of a trust that would own the Chilean entities—was tax efficiency. However, the documents for this structure were not completed. The New Zealand lawyer who began the process of structuring these entities repeatedly wrote to Johnson to warn him that double taxation may apply because the documentation was not complete.

If tax efficiency weren’t that important to Johnson, could the confusion of multiple jurisdictions have been his aim? Say one of the equity investors sues and receives some kind of judgment against GGC in London, there are no assets in London to attach. Or should he go after the Bank of New Zealand account for satisfaction? But it’s owned by someone else and has no GGC funds. If he tries to sue in Chile, the judgment could be enforced provided that exequatur requirements found in both international legislation (New York Convention on the Enforcement of Arbitral Awards) and local rules are met, and provided that the defendant entity is the same entity that took part in the foreign arbitral proceedings. In some of the cases, this is legally impossible; in others, the costs involved in the different stages of the process are prohibitive.

On June 16 2014, Johnson wrote to an investor regarding refund requests:

“The contracts are private offshore agreements, so there is no tie to Inmobiliaria GGSA on most of them. It says they can ask for a refund after map approvals if they don’t find a lot they like.”

This quotation shows that Johnson purposely structured the contracts to severely limit the potential for refunds or lawsuits.

Are these contracts legal? Our attorney has informed us that despite the declared jurisdiction, since the GGC real estate is located in Chile, the promesas on lots must follow Chilean law. With only two exceptions, none of the promesas do.

Requirements for Valid Contracts in Chile

To be valid in Chile, the contracts can be in any language. Those that ultimately convey property titles under the urbanism law, such as the residential lots, require the signatures to be notarized. If the signatures are notarized outside of Chile, further legalization by a Chilean consulate is required. (Chile is not a signatory to the Apostille treaty.) Only the original documents can pass through this process, not electronic scans. The documents must be filed in the register of public records of a Chilean Notary.

Further, because GGC was selling lots before subdivision approval, a bond or insurance was required to protect the buyers. Johnson did not post bond, nor did he buy insurance.

The Agricola Share purchase agreements need not be notarized, but any associated residential lot promesas are different matter. They must follow the same rules as the other residential promesas.

There are many contracts that bear a notary stamp dated on the kj contractsame day— June 16 2014— and as “a true copy,” even though these contracts were signed during the eleven and a half month period, from June 16 2013 to May 30 2014. This stamp does not make real estate promesas legal in Chile.

You might wonder why this notarization happened. Why would contracts signed on all different dates, from June 16 2013 to May 30 2014, be brought to a notary on the same day, June 16 2014, copied and stamped when this is a meaningless exercise in terms of the legal requirement?

We speculate that Johnson finally realized that virtually none of the contracts were properly executed. Indeed, in a conversation he had with one of the investors, Johnson admitted that all the contracts that weren’t notarized were invalid.

“I have copies of all of them [the contracts] that I got notarized, you know legalized, just so there’s some merit to them, you know, for the people who haven’t, who haven’t met me at a notary or sent a power of attorney and that kind of stuff, right?” [Emphasis added.]

Despite what Johnson said, it’s doubtful that the purposed of this exercise was to help the hapless investors who didn’t have legal contracts. We speculate that as a CYA maneuver, he gathered the contracts—including some share subscription agreements that didn’t need to be notarized—went to his friendly, neighborhood, crooked notary and asked what to do. The guy said he’d stamp them as true copies. Stupid gringos will think it looks official, and they don’t read Spanish anyway, so they’ll be none the wiser. If that’s what he said, then he was correct.

crooked notary stamps

This is the crooked notary’s stamp. The round stamp was put towards the bottom of each page and the rectangular one was put on the last page. It says, “I certify that this resulting photocopy consisting of four pages conforms to the original.”

across staple notary stamp

This is a legitimate notary stamp, placed on two sheets across the staple to prevent the pages from being separated and possibly substituted.  Below is the stamp this notary used for the signatures.

Real notary stamp

Note the ID numbers and finger prints. In this case, a lawyer with a power of attorney signed for the buyer.

Ponzi Contracts

Perusing the “Second Round Founders” contracts, you’ll find unusual features. The investment is a non-interest bearing loan that is to be paid back 100% in three years, with title to a residential lot also to be transferred to the investor by the end of year three. Zero interest loans can be found when a developer is trying to push sales, but usually the situation is the other way around, that is, the developer offers zero percent financing to the buyer. It may be possible that the residential lot represents interest paid on the loan to the investor, although the contract does not say that.

Be that as it may, this is an aggressive loan schedule, especially handshakeconsidering that Johnson committed to delivering developed lots, yet did not have subdivision approval, had no real estate development experience and knew virtually nothing about Chile, not even the language.

The second founders round loans, including the orchards, totaled $4.6 million and were ostensibly for subdivision approvals and infrastructure, yet those funds were used to make the payments on the prodigiously priced land that Johnson represented GGC already owned free and clear. How was he to begin repaying the loans, as required by the end of year one, other than by bringing in new investors?

Another little twist to the second founders round “investment” is that even though the contract says that the loan is being made to a New Zealand entity, the payment was made to the Asesorias y Servicios Galt’s Gulch SA bank account in Chile.

As an interesting aside, Johnson insists that the second founders round investors are neither investors nor creditors. He refers to them as “clients.” We can think of a couple of reasons why. If they are investors, the SEC would probably love to be sniffing around for a prospectus, of which there is none. Or maybe Johnson wants to make very sure that these “clients” don’t get the uppity idea that they have any claim on GGC’s entities.

Shares of a Whole Lot of Nothin’

Johnson incorporated a company for the farm operation. The shares of Agricola y Comercial SpA were supposed to represent an ownership stake in an organic farm operation, both a piece of the action on lemon harvestexisting lemon and avocado orchards and the profits from a long list other fruit and row crops. The real estate holding company, Inmobiliaria Galt’s Gulch SA, has an area of 100 hectares much of which is a lemon orchard. Johnson planned to subdivide this area into five 10 hectareorchard lots and one 50 hectare lot. The five smaller lots would be sold to individual investors to be managed by GGC. The 50 hectare lot would be sold to Agricola and be owned by the shareholders.

It seems that Johnson never got around to subdividing the orchard, even though he somehow did get around to selling the orchard lots that didn’t exist. Maybe he was too busy trading for Andean water scams or stealing money for wildly profitable bitcoin investments. It could have been that his architects and engineers were exactly as he describes them—crooked and/or incompetent. That has yet to be determined.

What we do know is that subdividing the orchard is a rather straight forward process. Since the purpose of the land would be the same, the subdivision was granted as a matter of right. Once Johnson finally applied for the subdivision in September 2014, it cost approximately $5,000 and took a couple of weeks. Johnson should have had subdivision approval before selling share subscriptions and orchard lots.

Johnson’s sales team was able to sell only 30% of Agricola shares. Many investors who wanted to buy shares were advised against doing so by their attorneys and financial advisors who rightly cautioned against buying shares of nothing. As it was, he finally got around to subdividing the orchard as a public relations gesture after the investors disclosed his malfeasance in various internet articles,  but he never transferred title of the orchard to Agricola. It’s still a shell company.

The brochure for the Agricola farm share program is a true marketing tour de force. (See for yourself here.) We hesitate to call it a prospectus, although Johnson called it that, since is it nothing lemon bins 2like any prospectus we’ve ever seen. No cautionary boiler plate, no warnings about how you could lose everything are included with the blue sky. We are assured that the farm is organic, even though in the next sentence we are told that it’s not, and that there’s a fantastic amount of water, even though most of the avocado trees are dead and the survivors are not producing due to water stress. We’re left with the impression that farming is really very easy in the can’t miss Mediterranean climate of central Chile. And hoo-wee! Look at all dem profits:

Year        Net Profit
2014       $582,888
2015       $1,243,181
2016       $1,262,923
2017       $2,660,387
2018       $3,091,672
2019       $3,523,871
2020       $4,016,738

The reality is quite different. One of the first things the employees told the investors when they took over the farm is that it is not profitable. The lemon harvest for 2013 was about 3 tons per hectare versus 30 tons per hectare for a healthy orchard. There were sections of the orchard that hadn’t been pruned in five years by the previous owner. There are mineral deficiencies in the soil. The irrigation system is aging and in need of an upgrade. The projections above are simply impossible. It will take time and money for the orchard to recover, even with million dollar improvements. However, there was no money for improvements. The $2.779 million taken in as loans for the farm were used to buy the Lepe/Las Casas property, or stolen by the Del Real family.

Five Star Guest Accommodations

Never fear, lucky Agricola shareholders. Even if the farm can’t make money, steady passive income could still be yours. Johnson planned to rent rooms in the main residence, the hacienda he referred to as the club house, and in the guest cabaña he referred to as a hacienda. From the marketing materials:

“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.”


 

renovations on cabana 2

Cabaña being renovated for the fall celebration. Johnson told the contractor to paint over any problems, but the contractor had too much integrity to do so. These cabañas are small, two room buildings, little more than a bedroom and sitting room, situated in the middle of the orchard and hardly on the level of upscale hotels, as advertised.


This guest stay operation was to net $180,000 in 2014 and with profits climbing to $297,674 (and no pennies) in 2015. You might ask what profit Johnson achieved in the first 10 months of 2014. Or, having read this far, you might not need to ask.

To round out this sure thing, passive income operation, GGC would launch its own brand of organic produce that would become renowned the world over. Johnson filled pages 13 to 28 of the brochure with tables of fruits and vegetables projecting the many millions in profits that would fuel investor dividends.

Johnson’s first foray into row crops was initiated just in time for the April 2014 celebration—a marketing event at the farm—when he had a field of about three acres planted. The Potemkin Village plot impressed some of the investors, as did the half-completed renovations for the Inn at Galt’s Gulch. Alas, the field was left to be eaten by the birds and no first harvest for Galt’s Gulch Organics was produced.

As expected, the Inn’s renovations weren’t completed, either.

No-Contracts-ville

In summary, the investors in GGC either hold unenforceable contracts because they were not properly legalized according to Chilean law, or they hold legal contracts that give them the rights to nothing.

One might say that the lesson of GGC is that investors should always hire local attorneys to be advised on how to enter into sound, legal contracts, and that’s certainly true. Yet some GGC investors did just that, and still have nothing to show for their trouble.

The most important lesson of GGC is that contracts are not self-enforcing, particularly not invalid ones. Because of this, the level of due diligence required to enter into an investment with an unknown developer in a foreign land is orders of magnitude greater than what we GGC investors did.

fgc logo with tag line

Why did GGC fail so spectacularly, so fast?

“The project was brought to a standstill in April of last year [2014], with an orchestrated chain of refund requests. This orchestration involved Jeff Berwick, Chris Serin, Wendy McElroy (she was duped, in my estimation), Josh Kirley and a handful of former staff, whom (sic) are seeking a stake in GGC, even though they did nothing but loot it.”
–Ken Johnson, comment section, Panampost.com.


Johnson and GGC must have achieved a record for the quickest johnson empty balloon 2failure of an affinity scam/Ponzi scheme in the history of financial crime. There are two reasons for this: 1. the abject incompetence of future convicted felon Johnson and 2. the integrity of Josh Kirley.

But first, we can’t stress enough the revulsion we feel reading Johnson’s attacks on his former employees. It is demonstrably ridiculous to think that they “looted” GGC. For one thing, only someone with access to the bank account could have done that and the employees did not have access. Further, the people to whom he refers were collectively gypped out of over $63,000. They are not seeking a stake in GGC. They are helping the investors because they feel obligated to us for being unwittingly used to steal from us. It’s their way of making amends.

The Abject Incompetence of Ken Johnson

It’s obvious that when running an affinity scam/Ponzi scheme, the optimal strategy is to structure it to run as long as possible. You want to put off that day of reckoning when the last sucker has put in that last dime and the jig is up. You also want to put away some bucks for your get away. You need to get out while the getting is good, never to return.

Johnson did none of that. His star may have burned out quickly, but it certainly did not burn brightly.

The contention that refund requests were orchestrated and “brought GGC to a standstill” in April of 2014 is false. The Recovery Team got the refund request list by polling the investors themselves, and at that time the dollar amount was insignificant. Besides, he only honored three requests: two in full on Sept 10 2013 and Nov 25 2013 and one in part in Aug 2013, all well before April 2014. How could refunds have caused problems when he didn’t pay up?

Here’s why Johnson quickly ran out of money, having nothing to do with The Recovery Team or refund requests or employees.

1. He paid too much for the real estate. Because the first property he bought was unsuitable for development, to keep the scam going he had to buy a second property. That property was just too expensive, and we believe he overpaid, as well. After paying for the real estate and pissing away the rest on lawyers, two residences, expensive restaurants, booze, and gambling, there was little left to build anything.

2. Simple financial mismanagement. He did not have anywhere near the funds to pay the $6.8 million purchase price for the second property, the agreement for which included crippling late penalties. Immediately after the closing on the property, he was unable to meet the aggressive eight month payment schedule. He incurred over $1 million in late fees in the last four months of 2013 alone.

3. He cheated his partner. Because he made these unsound land purchases, and because he defrauded Jeff Berwick of his 50% ownership of GGC, Jeff stopped marketing the project. Probably all GGC sales leads were generated through The Dollar Vigilante. This was an affinity scam after all, and Johnson was an unknown. He relied on Berwick’s libertarian readership for victims. That pipeline dried up in early 2014. Take a look. Johnson’s lie couldn’t be more obvious–income collapsed months before April 2014 even if there were an “orchestrated chain of refunds,” which there wasn’t.

GGC Investors Cash InflowClick on chart to enlarge.

4. The con man was swindled. The GGC bank account was blocked in January 2014 for suspicious activity leaving the project without a way to accept investor funds. Johnson arranged with Chilean swindler, Mario Del Real, to use his daughter’s bank account for GGC business. The Del Reals, very predictably, proceeded to swipe the majority of the $1 million that went into that account.

5. More financial mismanagement. The GGC loans had a short payback period of just three years, with the initial 25% payment due on the loan’s first year anniversary. Johnson had no sinking fund for the loan payments and no bond or insurance for refunds, which is a felony in Chile. Loan payments began coming due in June 2014. That was the coup de grace for his fraud.

The Integrity of Josh Kirley

Josh is a major investor in GGC. When he began to realize that there were significant problems, rather than hope them away, he investigated and found the unpleasant truth. In mid-2014, Johnson was going to make another push for investor financing that could have been the source of Josh’s refund. Refusing to prey on new, unsuspecting victims to make himself whole and with the help of a second investor who has since passed away, Josh found and organized other GGC investors and blew the whistle. He has suffered slander and liable from  future convicted felon Johnson–and occasionally from Jerry Folta, we might add–ever since.

superjosh

Josh Kirley. Fighting for truth, justice and the libertarian way.

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