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earth Archives - McGillespie
GGC Part 7 — Jerry Folta’s Legal Action against IGGA
By Terence Gillespie May 9, 2015
Part 1: What Happened and When?
Part 2: Root Cause of Problems?
Part 3: How Might Problems be Avoided in the Future?
Part 4: What’s the Deal with Berwick and GGC?
Part 5: Feedback from the Recovery Team
Part 6: Johnson Re-Occupies Galt’s Gulch
E-mail Sent to Jerry Folta
To: jerry@foltas.com
Date: Mon, 04 May 2015 21:14:41 -0700
My name is Terence Gillespie, the author of the GGC
series Parts 1 – 6, starting here:
http://mcgillespie.com/galts-gulch-chile-story-timeline-references/
I’m writing to request a comment from you on an apparent snippet
of an e-mail exchange between yourself and Wendy McElroy that
Kenneth Johnson cut/pasted into the comments section of a recent
Panama Post article.
On May 1, 2015, at 5:04 PM, Wendy McElroy wrote:
Are you suing Ken J?
On Fri, May 1, 2015 at 5:08 PM, Jerry Folta wrote:
Absolutely not. Cathy, as is her way, got it wrong.”
Here are my questions for you, Jerry:
1) When you wrote, “Cathy . . . got it wrong” did you mean that it was actually lawyer, Héctor Hernán Herrera Flores, who filed on behalf of entity “Jumpin’ G’s SpA” against Inmobiliaria Galt’s Gulch S.A. per this public document?
CORTED DE APELACIONES DE SANTIAGO
Sec: Civil Folio: 00240284
Jdo: 18 CIV Rol : C-007863
Fecha: 02–04-2015 Hora : 12: 42
Materia : C01
2) Is “Jumpin’ G’s SpA” your entity or one in which you have an interest?
3) Why did you use that entity in the “Promesa de Compraventa y Prestamo” with IGGSA for a 25 acre lemon orchard lot?
4) Who is required to respond to the action, Pamela Del Real or Kenneth Dale Johnson?
5) Why not use arbitration, which your contract allows, instead of a much more expensive civil action?
I’m writing an article about this filing as I think it’s applicable to the series, and more importantly, justice and restoration to investors such as yourself. Please respond within three days so that I may include your view on the matter.
I’m sorry for any losses you’ve had with respect to GGC. All private correspondence between me and you will be kept private, if you prefer. However, the questions I am sending you will be in my article. Please mark clearly any information in your reply that you would prefer to be kept private.
Jerry’s Response
Jumpin’G’s SpA is owned by a Trust that I set up for the benefit of myself and my heirs. The current General Manager of IGGSA according to public record is Pamela Del Real. Arbitration is inappropriate because she became General Manager as a result of fraudulent actions. The approach I’m taking hopefully provides flexibility going forward in clarifying the legal ownership of GGC.
Once ownership is legally clear it is hoped all buyers/investors, including members of the Rescue Team, will take title to their properties (as well as GGC equity for First Round Founders) and GGC can be completed.
Prior to sending the e-mail, above, to Jerry, I published a detailed inference about it’s meaning with respect to GGC investors and Folta. Having now received Folta’s response to my questions I’ll supplement that public inference by adding comments to the original under the heading “To Which I Add/Clarify”. Here’s what I originally wrote:
Defendant: Galt’s Gulch S.A. . . . Don KENNETH DALE JOHNSON,
El Promitente comparador (Jumpin’ G’s SpA)
$450,000 US.
Here’s how it works GGC Investors: Jerry’s entity filed a civil suit against Inmobiliaria Galt’s Gulch S.A. on 4/2/15. Johnson lets the suit go through without protesting and Jumping’ G (Jerry Folta) “wins” the suit, by default.
Now, if Josh Kirley’s suit goes in favor of the GGC Investors then Jerry Folta is first in line to get paid. How? Because Folta takes the judgment and turns it into a lien against Inmobiliaria Galt’s Gulch S.A. Now, guess who has to get paid first when the entity (Land) is sold? Correct: Folta.
If Josh’s suit goes the other way then Johnson “pays off” Jerry’s suit for $1 or whatever.
Folta and Johnson have been playing both sides against the middle the whole time. This is just more of the same. I highly doubt $450,000 was ever given to Johnson by Folta. This is just a way for Jerry to recoup his losses with Johnson before the other 75 investors.
Now, do you see why Folta is technically telling the truth when claiming he’s not “suing” Ken Johnson? No, it’s his entity that has filed the suit. And if you question Folta about that then he’ll still deny it and even that is true. No money changed hands and he’s already agreed in advance on the sham with Johnson.
It’s a LIEN disguised as a CIVIL SUIT!
Welcome to the world of fiat money, invoices, bills, and yes, civil suits. Just because there’s a number on a suit between two supposedly “warring” parties does not mean any money has changed hands or that anything is really owed.
To Which I Add/Clarify
Folta’s action is filed against “Inmobiliaria Galt’s Gulch S.A.”, referred to as IGGSA. The original entity created by Cobin, et. al., was “Galt’s Gulch Chile S.A.. Therefore, Folta’s action is against Johnson’s personal entity into which he fraudulently conveyed receipt of GGC properties purchased with investor money. This fraudulent conveyance is the primary and largest fraud, performed by Johnson, that caused all the “controversy” about GGC.
Even if Johnson shows up to contest the action it could still go in Folta’s favor.
This is a legal, not a moral, inference that I’m making about Folta becoming first lien holder in line. Morally, all investors are equally entitled to restitution. Legally, it may not make Folta first in line but it would make him among the few investors with a state judgment in their hands, unless others decide to file such actions. Also, the lien would be against an entity holding stolen property. Whether or not the Chilean courts would recognize or consider this fact is anyone’s guess. That probably depends on the decision regarding Josh Kirley’s separate action currently awaiting a judgment
My hope is that neither Jerry Folta, nor any investor, would be foolish enough to go along with such a scheme with Johnson. Also, as written in my e-mail to Folta, the last thing I want to see is any investor losing more money to Johnson.
As described in Part 6 under the heading of “Litigation Pending”, I have since learned that Folta did purchase a Promesa (Option) for a 25-acre lemon orchard lot. I have no reason or evidence to believe that Jerry did not pay real money for this lot (Or an option for such a lot, anyway). My inference that Jerry is “Playing both sides against the middle” is based on his continued support of Johnson amidst an avalanche of evidence and eye-witness testimony that Johnson’s a crook. It’s also based on Jerry’s strange and veiled responses to specific questions from the recovery team and a rather misleading response to an e-mail from Wendy McElroy (A private e-mail made public by Johnson, I might add).
When you have people, entities, and representatives of entities, involved in legal filings things get murky and one can play lots of legalistic and semantic word games with the truth. There are so many combinations of possibilities for casually, but inaccurately, describing Folta’s action that anyone who doesn’t get the language exactly correct can be easily (And maliciously) accused of “not knowing what’s going on” or, in Cathy Cuthbert’s case, “… as is her way, got it wrong”. My e-mail to Folta was more specifically worded. As you can see by Folta’s response, Cuthbert was closer to the truth than one might gather from Folta’s dismissive, and unforthcoming, e-mail response to a straightforward question by Wendy McElroy with the same general intent. So, why didn’t Folta just explain the details?
And, what about Folta’s legal action might “clarify legal ownership of GGC?” If the judgment is turned into a lien against IGGSA then it most certainly is a lien disguised as a civil suit.
The Big Picture in Simple Words
Can the booty of a theft be liened?
Someone steals money from my partner and I. The thief uses the money to buy a car and puts his corporation on the title. Then the thief meets another thief who transfers the shares of the corporation into his name. Upon finding out about the car my partner panics and files a lien against the shares of the corporation. Now, what happens when the car is found and I try to get my money back? I can sell the car and split the money with my parter, right? Or, if we want the car we can keep it in our partnership, right?
Key: The GGC investors and Folta are the partners. The first thief is Johnson. Sarrazin and Ramirez sold the car. The second thief is Mario Del Real. Jerry Folta is the lien-holder. The GGC investors and Jerry are the rightful owners of the car.
The moral and legal answer should be that nothing downstream of the original theft matters. And, in the case of Jerry Folta’s legal action, a lien on the shares of the corporation formed by a thief with money he stole is merely a stopgap measure in case the original owners of the money gets shafted because everyone is so confused about the theft and the shares of the car.
It’s a little more complicated than that but I’ll expand on the metaphor in future updates.
Folta is hedging his bets in case the money won’t or can’t be returned to the original owners but the shares of the corporation may be returned to thief number one, Johnson. Actually, the second thief could keep the “car” and Folta’s legal action would still hedge his bets if his legal action prevails.
Anyway, That’s GGC in a nutshell, folks.
GGC, Part 6 — Johnson Re-Occupies Galt’s Gulch
By Terence Gillespie May 2, 2015
I’ve spent the last two days responding on the comment section of an article written by Rebeca Morla at the Panama Post. Though I find the article represents mostly Johnson’s point of view I sympathize with any journalist under deadline having to come up to speed on the Galt’s Gulch Chile project. I was informed by a comment on Doug Casey’s International Man forum that Rebeca used this series to prepare her article. I look forward to more articles from her and the post in the future. Also, James Guzman followed up with a brief article on GGC, as well. The only thing I might change about Guzman’s article is his reference to the rescue team’s entrance to the property, last October, as an “armed capture”. That probably comes from Berwick’s article referring to it as a “SWAT Raid”. My understanding is that there were no guns and no violence involved in the recovery team’s entrance to the property. I make that distinction because it’s important to libertarians and because Johnson’s recent reoccupation did, in fact, involve the use of a firearm. As I’ve pointed out in previous articles, Johnson is no libertarian and should not be confused, in any way, with the principles of Ayn Rand’s “Atlas Shrugged” from which the name Galt’s Gulch is derived.
With Mario Del Real already in control of “El Penon” (GGC Parcel #1 of 2) farm workers working on “El Lepe” (The second and largest parcel of land that comprises Galt’s Gulch Chile and it’s offices, hacienda and lemon trees) reported, last week, that, under threat of violence by three hired thugs (One concealing a gun), Ken Johnson has taken back occupation of “El Lepe”. Below is the narrative from farm managers Renzo and Ken Carpenter as sent out to investors on Wednesday, April 22nd.
Friday, April 17th at the farm:
Farm worker, Jaime Olivares, while cutting espino trees saw Manuel Hermosilla walking inside the property. When confronted Hermosilla said that he would kill Farm Manager Diego.
The Farm Managers made a complaint with the Curacaví police against Hermosilla for entering the property and making his death threat.
Monday, April 20th, at the farm:
At 8:30 pm, Ian Thornton and three thugs with a pistol, arrived at the gate and said to Diego and Coto, “Open the gate. We are coming in, one way or another.” Diego let them in.
Ian confiscated their telephones.
Coto, from a hiding place, was able to communicate with Renzo who was in town on farm business. He alerted Renzo as to what was happening.
Renzo phoned the police. By the time the cops arrived, Ian had put new chains on the gate so Renzo and the cops could not enter the property.
Renzo called Ian from the gate. Thornton said to him, “You have two options, cooperate or go to jail for the things you sold.”
Former developer Johnson arrived around 11 pm, inspected the house, and left with the IMac Desktop computer.
Thornton offered Renzo work if he would cooperate.
Thornton said that no employee would be paid this week, but would be paid starting next week.
Tuesday, April 21st, Morning, Santiago:
Former developer Johnson arrived with two police officers at Kenny’s apartment in Santiago.
Police showed proof of GGC ownership of the Jeep to Kenny.
Kenny explained to the police that the jeep was voluntarily loaned out and the keys handed over to him. He gave the cops the keys.
The police ask for a GPS and computer, but Kenny told them that he didn’t have any registered company property. Johnson called his lawyer who advised him to tell the cops to take only the jeep.
Johnson said that Del Real is about to go to prison and anyone aligned with him is in trouble.
Both the farm and the jeep are in improved condition from when The Recovery Team took possession of them. We have photographic evidence of that. The employees were paid up to date, and we were current on all bills.
The GGC Recovery Team received a report from Curacaví this evening that Johnson presented one of the farm managers with a criminal complaint for selling various “antiques” and old equipment around the premises to raise money for salaries and operating expenses. The farm managers were interrogated by Johnson’s lawyers and the PDI (Chilean FBI equivalent) for hours.
NOTE: As of May 3rd, 2015 there are no criminal charges on the court website. Johnson may have had a lawyer write up charges but it’s doubtful he would spend the money to file them.
Recovery Team Reaction
These are bullying and intimidation tactics. Former developer Johnson knows full well that the money was used to pay workers wages and operating expenses of an unprofitable farm. What does this say about him, that this swindler who defrauded a group of international investors of $10 million would use the cops to intimidate his former employees, the very men he, just a few hours before, terrorized with Santiago mafiosi? What does it say about Jerry Folta who bankrolled Johnson? And what does it say about Chile?
Regarding Johnson’s reoccupation, Cathy Cuthbert writes:
“The second Johnson Reign of Terror begins, *yawn*. At least we don’t have to worry any more about Diego and Renzo being knifed in the middle of the night.”
“We were well aware that something like this might transpire since for about four weeks, we’ve had evidence of Johnson’s goons casing the farm, and noted several amateurish attempts to gain inside information and stir up dissent among the Recovery Team.”
“While Johnson and Thornton celebrate their Pyrrhic victory, Uriah Heep-like as is their habit, we are reminded of that priceless scene from Tin Men.
The expenses of the unprofitable farm are off our backs. All the legal fund money will go to legal fees at this very important juncture.
The harvest season is essentially over so there’s no income now, anyway. This is the least profitable time of year and excellent timing for us.
Johnson’s prodigious liabilities are intact and increasing.
The Recovery Team is relieved of management responsibilities, giving us more time to concentrate on the upcoming litigation.
Former developer Johnson now has a golden opportunity to prove he can keep his commitments.
We achieved our goals during our tenure at the farm. We blocked former developer Johnson from misappropriating this year’s harvest income. We paid the farm workers their back pay, pension and health contributions that Johnson owed. We acquired valuable information for our criminal discovery. We’ve made friends and contacts in Curacaví. We demonstrated to the community that we are willing to pay debts. We improved the condition of the farm after years of neglect.
The most important news is that Diego, Coto and Renzo are safe. Whether they continue to work on the farm or find other positions, we thank them for their service to us and wish them well.
The most important take away from this update is that our litigation plans are not affected by this violent act. In fact, we’re better off.”
Let Johnson Meet His Obligations, for a Change
Johnson used investor money to purchase the property and received title to it in his own personal entity (Inmobiliaria Galt’s Gulch SA) and not the entity created by the originating partners to receive title (Galt’s Gulch Chile SA). He’s been responsible for paying all bills, taxes, salaries and maintenance costs of the property from the date of the sale and up to the present day. When the recovery team visited the property, last October, the place was in shambles and the recovery team took it upon themselves to bring all bills, taxes and salaries up to date and clean the place up. From the standpoint of the fraudulent legal title under which the property is currently being held, the recovery team was under no obligation to make such payments. Such remains the case, today.
Of course, Johnson’s MO is to have his cake, eat it, charge others for it, demand someone pay for a new cake and the cost to refrigerate it, refuse to acknowledge that there ever was a cake, accuse anyone within sight of having stolen five cakes, and assaulting the bakers wife! Will this translate into Johnson claiming that Mario Del Real is responsible for all GGC obligations because thief #2 (Real) stole the booty from thief #1 (Johnson)? Johnson’s recent history shows that, if one can imagine it, Johnson can do it, claim it’s the truth or accuse someone else of doing it. The least likely of all things to occur is that Johnson will keep his word to anyone or anything he’s talked about.
Johnson appears to have been out-swindled by Mario Del Real who somehow ended up with a significant portion of the shares of Johnson’s personal entity and, therefore, ownership of GGC. Johnson is suing Mario Del Real regarding this transfer/sale. Though he claims to be active in the suit, records show there has been no activity on it since November of 2014.
The investors have been requesting, then demanding, that Johnson share accounting and legal documents with them for 205 days, now. Johnson has been putting them off by returning their requests with either accusations or document fragments that are available to the public. Using Jerry Folta as an intermediary, Johnson recently tried to get the recovery team to pay his accounting bill of $8000 to get access to the records the team paid for, long ago. Here’s an example of the kinds of “deals” Johnson tries to make behind the scenes with his investors: The GGC team was to pay the accountant, in full, and in return would receive an income statement and balance sheet. The full accounting detail of all transactions would then be sent to Johnson and denied to the recovery team!
Well, the GGC team did not take the “deal” as they had already gathered the documents and conducted their own painstaking forensic accounting of what has transpired. As outrageous as the “deal” offered to the team was, an important thing to note is that Johnson doesn’t even have a copy of his own books!
The cost of filing a completed criminal complaint in Chile is ~$50,000 US. Johnson somehow managed to get one filed and But, Johnson has not filed anything with the Chilean courts, recently. The complaint he showed up with at the GGC gates on April 20th, with two policemen in tow, was likely a prop drawn up by a lawyer (Johnson doesn’t speak Spanish).
Johnson’s “complaint” was that the farm workers were selling off his property to pay farm worker salaries and pensions. One must understand that Johnson’s priorities leave the payment of expenses such as farm worker salaries downstream of just about everything.
Cobin made a comment on a podcast in early 2014 wondering when Johnson would run out of lawyers willing to work for him as Johnson seems to have trouble paying his legal and accounting bills. That could mean his current lawyer either won’t be around for long or is expecting a form of compensation other than money.
Johnson is Probably Furious and Broke
If Johnson is the psychopath he’s widely speculated to be such predators are infuriated by exposure of their crimes and schemes. They become physically ill upon losing control to their “Inferiors” (Everyone other than themselves). One theory is that Johnson was so infuriated when the recovery team took over physical control of the property, last October, that he couldn’t stand himself until he took it back. As trivial and adolescent as this may seem to an outside observer such motivations are quite real and possible to a psychopath.
Johnson presents as positive for most items of Dr. Robert Hare’s psychopathy checklist. As such, it’s not irresponsible to use the metaphor that we are all mere projections in the twisted video game Johnson sees through his eyes that he calls his life. There’s a certain threshold of destruction and pain that can only be inflicted by those incapable of feeling empathy for their fellow man and many of those directly involved with GGC believe Johnson is there.
Ironically, Johnson’s occupation of the land is of minor importance to the recovery team. It may even give the team the ability to retain the moral high ground while letting Johnson pay “his own” bills, for a change. Any money that johnson uses to pay a bill would have come from the investors, anyway. In that sense, any bills he pays might be viewed as a form of recovery.
Johnson, like socialism, may also be running short of other people’s money, about now, and need a place to stay. Since he used investor money to pay for the property they should send him an invoice for the rent he’s now accruing by occupying the property and blocking such income to investors. His rental rate could be set at the same rates he quoted for a per-night stay at the hacienda in the sales brochures ($150 per night). Every month Johnson occupies GGC would incur rent due of $4,500 US.
Johnson may have something up his sleeve in attempting to sell-off (Again) the most valuable asset of the GGC land: Water rights. Although the injunction, which blocks any sale until all legal actions against the property are resolved, is still in place, Johnson’s current lawyer has experience in the area of water rights. It’s not outside of the realm of possibility that Johnson has worked a deal with the lawyer to do this. The criminal complaint Johnson filed, that enabled him to show up at the gates with two policeman, can cost as much as $50k US to perfect. Johnson may have worked some backroom deal with the lawyer to work, pro-bono, with the promise of a share of future water rights. This is mere speculation on my part, but possible, considering what is of remaining value of El Lepe outside of free rent for Johnson.
Johnson Surfaces to Contact Wendy McElroy
Johnson “surfaced” in March to contact libertarian writer, Wendy McElroy, who purchased an option on a GGC parcel with her husband, Brad. Though Wendy is no fan of Johnson she thought perhaps talking with Johnson would facilitate some progress in negotiations without further involvement of State entities. For Johnson’s part, he’s received nothing but the bad press he deserves since Wendy’s exposé, last year. Perhaps Johnson thought he might turn that around if he could be seen as reasonable to a talented writer and GGC option owner. McElroy broached the possibility of further exchanges with Johnson to investors and I have no information about how it might have been received or if any progress was made.
No doubt Wendy’s exposé saved some number of potential new investors from losing money in GGC. She was not, however, responsible for the drop-off in GGC sales, as previously speculated. A forensic accounting of sales receipts shows a precipitous drop-off of investment money in January 2014 after Berwick stopped marketing GGC in October of 2013. So, after deals already in the pipeline were closed … sales slowed to a trickle. As described in Part 4 of this series, Berwick’s marketing efforts were the prime mover in bringing investor money into GGC. When Berwick stopped marketing, people stopped investing. Wendy’s articles exposed the reasons why Berwick stopped marketing but she did not cause him to stop. Berwick followed up the next day with an article of his own confirming Wendy’s information and adding his own take on the state of GGC and why he stopped marketing efforts.
The lemon trees need 50 Liters per second (LPS) to thrive and are now only receiving 1.5 LPS. Receiving so little water will greatly stress the trees and is a bad indictor for next years harvest.
The office and Hacienda were in great shape prior to Johnson’s reoccupation with pictures to prove it. In fact, it might have been about time to start renting it out for supplemental income to support the farm. Now that Johnson’s on site and blocking access to the investors, again, Johnson will most likely let the property fall back into decay. For all of Johnson’s lies the place was approaching biohazard status as the recovery team came on site, in October. We can only hope that Johnson’s hyped “Animal sanctuary” has also lost it’s credibility and more dogs won’t be dropped off to starve to death while Johnson feeds salmon filet’s to his own dog.
There are two civil suits pending from investors:
Josh Kirley’s suit which questions the procedures with which “El Lepe” was purchased from Ramirez, by Johnson. The Chileans are meticulous in their paperwork and Johnson showed the wrong ID for the deed of purchase. However, he did show the correct ID (Passport) in the closing. This civil case has already been heard and is awaiting a decision.
Jerry Folta’s civil suit, filed on 4/2/15, on behalf of Jerry’s entity (Jumpin’ G SpA) against Johnson’s entity, Inmobiliaria Galt’s Gulch S.A., for $450,000. Folta paid $450,000 US for the purchase of a 25 acre lemon orchard lot. It appears to me that Folta’s suit is positioned to become an uncontested judgement that will be turned into a lien against Johnson’s entity. Such a lien would put Folta in line before other investors should the company that holds the property be sold. Should Kirley’s suit start fraudulent sales to unravel Folta’s at the front of the line to block the sale or be paid off first.
I should mention that Johnson’s suit filed against Mario Del Real is about the theft of already stolen property. The first theft was performed by Johnson as he took investor money and used it to take ownership of the land in the name of his own personal entity and not the entity formed by Cobin, Eyzaguirre and Berwick with which receipt was to be taken. Therefore, Johnson’s suit against Real involves the dispute between thieves of previously stolen property.
Civil lawsuits are not issued a date to be heard in Chile. This is Chilean style justice and cases are heard as the judge gets to them or sees fit. The general public does not know when a case “is about to be heard”, despite Johnson’s public warnings.
Folta’s Follies
Jerry Folta has been playing both sides against the middle since GGC started unraveling. He pretends to support Johnson while filing civil suits against him. When questioned, he says the other investors don’t understand what’s going on and that he’s not suing Johnson. Technically, it’s Jerry’s entity (Jumpin’ G SpA) filing against Johnson’s entity (Inmobiliaria Galt’s Gulch SA). Is that what investors don’t understand? That the civil suit is filed between entities and not people? If so, Folta’s playing word games with the investors. Folta’s contracts are convoluted, as well, with all sorts of meandering language and terms.
If Folta still supports Johnson and yet files such lawsuits against him, then they’re both playing games such as what I’ve described as a lien disguised as a civil suit. What normal business relationship involves sending invoices to each other in the form of civil lawsuits? Perhaps a relationship in cahoots to use any form of fiat they want to make things go their way: Fiat loans, invoices, liens, mortgages, and even civil lawsuits, in whatever manner they agree to use them to protect their interests. It will take more digging to unravel such alleged constructive filings, completely, and I have not done so.
My predictions are that the same sorts of things that happened before, when Johnson was “in charge” and blocking farm access to the investors who paid for it, will happen again:
Johnson will make no improvements, whatsoever, to the property.
Johnson will conduct no maintenance, whatsoever, to the property.
Johnson will string along, exploit and burn any employees or creditors who didn’t learn the folly of trusting him the last time around.
The place will be slowly returned to biohazard status as a result of Johnson’s squatting and “living” habits.
No bills will be paid so the electricity, and any other utilities, will be shutoff per the policies of the local Chilean energy provider.
Johnson will spend his days trying to figure out how to sell-off anything of value he possibly can: Water rights being the crown jewel and trickling downwards from there.
Any money Johnson receives as a result of one of his sell-off schemes will go directly into his pocket and to no one else.
And, last but not least: Even Jerry Folta will get further burned by Johnson.
When Johnson sends public updates about GGC I’ve found the best way to glean any actual truth they may contain is to invert every assertion and work from there.
Galt’s Gulch Chile, Part 5 — Feedback from the GGC Recovery Team
By Terence Gillespie January 28, 2015
Part 1: What Happened and When? — GGC Story, Timeline & References.
Part 2: Root Cause of Problems? — The Creature from Galt’s Gulch.
Part 3: How Might Problems be Avoided in the Future? — Contracts are Good for Libertarians, Too.
Part 4: What’s the Deal with Berwick and GGC? — Jeff Berwick & GGC: A Regrettable Summary.
Last week, a GGC investor working with the Recovery Team sent me an e-mail with feedback on the four articles I’d written about the Galt’s Gulch Chile land development deal. Though I’d sent the first two articles to John Cobin and Wendy McElroy, this was the first correspondence I’d had with someone directly involved with the deal. The first four articles were written from what could be gleaned from all public documents, radio shows, forums, facebook, articles and their comment sections. Part 5 brings the series current with new information and feedback from those involved. My hope is that such provides a bridge to future articles that may be of more direct assistance to real-time recovery efforts. To that end, this will be the last article that refers to Cobin/Ezyaguirre, in any significant way, as their initiating role has already been addressed and they were cut out of the deal early in the development.
As you read the exchange (And any article in the series) keep in mind that the actions of those involved are either good, fine, questionable, wrong, or illegal. Much of the last three categories can only be decided, in retrospect. The legalities depend on “the law” of one’s vantage point: Natural, Chilean or US. My opinion is that most all of Johnson’s actions were wrong from the standpoint of natural law as I see nothing indicating he ever intended to keep his promises to those involved. The Recovery Team would prefer to remain diligent and prudent in refraining from making legal judgements without supporting evidence.
Recovery Team: Part I: It is not clear that the project had enough water for the development as Cobin advertised. As you know, it’s a dry climate, and scope of the project was large. However, another huge problem was that it is all environmentally protected. I have been told that the gov’t will allow only 12 parcels to be carved out of it.
Terence: Yes, Cobin’s water estimates could only be realized if all the wells were cleared, consolidated and inscribed to the property. Cobin said he and Eyzaguirre could do it (Restated by Cobin on his radio show during Berwick’s apology episode) and such was to be a crucial part of their contribution to the deal. Everything I’ve read indicates Johnson and Berwick cut ties with Cobin before the property was purchased. Johnson’s accusations against Cobin, or anyone else, for that matter, hold no weight because of Johnson’s clear pattern of accusing others of his own failures.
I hadn’t read that environmental concerns were tied in with the inability to zone the land, properly. If so, overcoming this obstacle would be as crucial to the project as consolidating the water rights.
Recovery Team: Also, I think you said–or maybe implied–that Cobin/Eyzaguirre somehow put money into the project. Other than pocket money, maybe, you are mistaken.
Terence: I see Cobin’s contribution as significant but non-monetary. He had the vision, chose the location and got the project rolling by involving Berwick to attract capital. This is what enabled Berwick and Johnson, neither of whom had stepped foot in Chile prior to flying down to meet Cobin, to connect with a large development deal within hours of their arrival.
Recovery Team: I doubt that Del Real and Johnson lived together. At one point early in their business (if you could call it that) relationship, Del Real bought office furniture, put it at the farm office and he and his daughter were working there. I’ll double check on that.
Terence: Berwick made this comment when talking with Cobin on his radio show. Since Johnson’s “sale” of GGC stock to M. Del Real and his daughter, Pamela, is important to the recovery, perhaps their living and working arrangements are worth knowing about.
Recovery Team: You imply throughout that Cobin/Eyzaguirre were necessary to the success of the project, but I doubt it. I have not met either person, but I have heard Cobin on the internet and have seen his astronomical consulting fees. Why Berwick/Johnson would agree to the equivalent of a finders fee of 25% for that property that can’t be developed is beyond me. Further, see attached the ridiculous marketing material that Cobin spearheaded. This wreaks of scam–$1M revenue per year for fish? Selling electricity? Selling water??? Too bad they didn’t continue on this vein, I would have been spared my losses since I wouldn’t touch the project with a ten foot pole with Cobin and his spin involved.
I am sure that had Johnson not been Johnson, he would have been able to find someone in Chile to develop the project. Cobin/Eyzaguirre were never necessary.
Terence: It appears Johnson did only enough “work” to muddy the waters for his cons and overpriced Chilean side-deals. Cobin/Berwick say the finders fee and GGC sales percentage was based on Cobin finding the land, creating the deal, negotiating the price of the first property, El Penon, to be $270/acre, and consolidating and inscribing the water rights. However, what Berwick and Cobin promised each other is between them. Nothing I’ve seen ties Berwick’s promise to Cobin to the GGC investors who probably never set eyes on Cobin’s business plan. Aside from his optimistic estimates the significant part of the document, for me, is that it shows that Cobin was fooled by Johnson’s persona, as well. It also shows that he had no idea that Berwick and Johnson would shortly cut him completely out of the deal.
Recovery Team: Part IV: Johnson lived off us for 2 years, not 3–from sept 2012 to sep 2014.
Terence: Very glad to hear that! I’ll update the article.
Recovery Team: The biggest hole in your articles is that you don’t even touch on the real story. This is NOT a purely gringo on gringo scam. Johnson could not have done what he did were it not for willing accomplices in Chile. There is a string of crooked notaries and lawyers enabling his illegal activities. Further, the Chileans, being good scammers themselves, sniffed Johnson out and then scammed him. Our problems now are that the overt scam artist, Mario Del Real, took control of the company and will not give it back, and that the seller, Guillermo Ramirez, appears to have 1. gouged Johnson on the price of the property, 2. misrepresented the water situation, and 3. may have been in partnership with Johnson in running up huge late fees. Johnson was never able to pay any but the first payment on the land on time. One document I have says that $1.14M in late fees were paid.
Terence: Wow! I stayed out of all the swaps (Sales?) and side-deals referred to in the “Kerfuffle” document to focus on the overall story and the gringos, first. I certainly understand that, from the GGC investors point of view, these are the most important aspects of the current recovery.
Recovery Team: Further, the whole time that one would think that Johnson would be very busy with obtaining the proper permits, managing the development and farm, as well as overseeing marketing and sales, he was looking for other “great deals” in Chile. That’s how he was scammed with the Rio Colorado deal. He also pursued buying water in Patagonia (?), and various bitcoin projects–he stole $100k from one of our investors with a bitcoin deal. He even put bids on a neighboring property and tried to negotiate a sort of lease-option arrangement with other neighbors. To the bitter end, he was sending emails telling us about how he was going to build a large solar greenhouse. Yet during all that time, the permits to subdivide the property were getting nowhere, the farm was deteriorating, and employees and vendors were being stiffed.
No vat tax was ever paid by Johnson for the sale of the lemons harvested and sold on the property. Last week, we finally had a visit from SII. Why couldn’t they have shown up when Johnson was stiffing them?
Terence: Whew! What a tangled mess. How intriguing that Johnson, himself, might have been scammed while he was using GGC investor money to protect himself from GGC investors. Unfortunately, lying to the bitter end is another characteristic of psychopathic behavior. For those who haven’t yet watched the documentary, “I, Psychopath” it’s worth the time:
I noticed Mario Del Real is described as having previously worked for the Chilean IRS (SII). Perhaps there’s a connection between his expertise and the timing of SII’s visit? Either way, bad timing all around.
Recovery Team: I have a descriptive timeline I’ve been working on. It definitely needs more work, but I’m supplying documents with nearly every entry. I’m also working on a financial timeline with documentation. I’m waiting for more accounting information to finish these.
Terence: I can’t think of anything more important to recovery efforts than such a timeline and the documents that go along with it. I’ll update the timeline in Part one with anything you can pass along.
Recovery Team: Btw, Jerry Foltas posts on the GGC webpage are not correct. I’ve caught him several times in contradictions. His only response to me is that I’m not reliable. yeah, right. I provide documents for everything I say, and I am trying to be especially careful to make no accusations. I try simply to present the documents and let them speak for themselves.
Terence: As an outside reader I can barely get through Folta’s “Newsletters”. I thought him a Johnson created sock-puppet prior to reading that the team had met with an actual person of the same name outside the GGC office. While reading Jerry’s “Newsletters” my theory was that he had taken advantage of the absence of a shareholders agreement (Which would have given a Right of First Refusal of IGGSA shares to all investors) and coaxed GGC shares out of Johnson in order to gain control of GGC. This would be “playing both sides against the middle”. A more tragic reality for Folta would be if, having lost his initial investment, Johnson scammed him again and Folta lost more money in return for GGC shares that were not Johnson’s to sell.
Where’s the Libertarian Media?
What’s with the absence of Libertarian commentary on Galt’s Gulch Chile? Even the Libertarians that spoke at the GGC Fall or Spring event held on GGC grounds in Chile seem to have little to nothing to say. The Recovery Team knows that the attendance of these libertarians was never an endorsement and that they had no access to information that would enable them to vett or endorse the project. It would be nice, however, to hear more from Ben Swann, John Tolley, Bob Murphy, Luke Rudowski, and others that actually set foot on the grounds.
Note: All articles on McGillespie.Com may be reposted in full, or in part, per Creative Commons license “By” and “Share-alike”.
Regarding Investors
I didn’t say much about the Founders or the investors in my first four articles because I didn’t know anything about them. As of today I do know this: The Founders had no idea what Johnson was doing. It’s beginning to appear that Johnson used Founder money to hire lawyers to protect himself against the Founders, themselves. They were confused with Berwick’s incompetence, and Johnson’s series of thefts and counter accusations, until mid-2014. They probably thought disagreements between Berwick and Johnson were that of typical partners, each with 50% ownership but neither with majority control. In fact, even today, it’s a tough forensic task to piece together the timeline and documents Johnson withheld from investors to the end.
Prior to his investment, Josh Kirley (One of the first investors) hired a Chilean law firm and offered them an additional bonus, above and beyond their hourly rate, if they could come up with any reason to not move forward with his investment into GGC. When they came up with nothing Kirley followed up with a background check of Johnson and still, no red flags appeared. Onlookers may protest that any number of items on some personal due diligence list were not covered but Kirley’s first two efforts at protecting his investment were quite bold. Contrary to popular understanding, lawyers are trained to find fault with, not enable, contracts and deals. And yet, they came up with nothing.
I’d also point out that the sophistication level of those who were fooled by Johnson’s psychopathic behavior is rising with every stone of this story unturned. Cobin’s business plan even documented Johnson’s many possible contributions to GGC as if they were additional selling points of GGC. It would be a mistake, therefore, for readers to believe that such behavior will be obvious should it be encountered, personally.
The money and ownership trail of GGC has been greatly muddied and confused by Johnson’s complex maze of stock swaps (Sales?), director appointments, multiple bank accounts, additional overpriced purchases, missed payments, secondary entities, bitcoin theft, and suspicious penalty clauses, etc. These are the sorts of things Johnson was “working on” while claiming to investors that he was busy developing GGC. Even today, the investors are attempting to piece together the basic financial statements and reports that Johnson had been denying them for so long. The documents they’re discovering reveal a maze of deceit rather than land development.
Money invested into GGC was always about purchasing land. There are still many reasons to hope that, if investors can’t recover money, they might recover land. It wouldn’t be a total restoration but it would restore control of what was always at the heart of the deal.
It took four articles to tell the story of what happened, why and what others may do to avoid problems like this in the future. I didn’t follow the maze of Johnson’s deals (Likely made possible by Chilean collusion) as it wasn’t relevant to those purposes. However, it most certainly is relevant to efforts to recover money or control over the land. If I can make a contribution in that area, I will. The focus now is on substantiating Johnson’s activities and the gaggle of Chilean swindlers that may have followed in his wake.
I’ll conclude Part 5 with an open message to Jeff Berwick: I’ve run across the name of the investor Berwick referred to as left homeless having lost everything on his investment into GGC. This investor is, indeed, in dire straits. If Berwick is ready to keep the promise he made on the Freedom Feens Radio Show then now (1/28/15) would be an ideal time for him to help this investor. I’m sure someone on the Recovery Team would be happy to pass along his current location. Contact them at ggc.pressrelease@gmail.com.
Jeff Berwick and Galt’s Gulch Chile: A Regrettable Summary
By Terence Gillespie January 8, 2015
This is part four of a series offering constructive criticism of the Galt’s Gulch Chile land development deal. To come up to speed on the story, see part one: GGC Story, Timeline & References. For the root cause of the current problems, see part two, “The Creature from Galt’s Gulch“. For what might be done to make future deals successful, see part three, “Contracts are Good for Libertarians, too“. Or, forget about all this and see my short, “Two Paragraph Expat Guide to Chile“.
“I did not invest in this fraud, but I listened to all Jeff’s blogs. It seemed clear to me listening it was HIS project and we were being asked to buy land based on Jeff’s brilliance and honesty which he portrays non-stop. He sure ain’t shy selling his brilliance. Jeff clearly wrote this new piece as an attempt to totally distance himself from the project from the get-go and any liability certain to come. I never heard any disclaimer on any of his posts/blogs about his being only distantly associated with this project. He portrayed himself as the owner and operator of it or at least that is how I heard it.”
“JJ” commenting on Berwick’s first Mea Culpa Communique.
I agree with JJ’s assessment of Berwick’s writing and media appearances with regard to GGC. Berwick continued to market GGC until the problems Johnson started causing from the beginning made it impossible to refrain from making a public statement. If Berwick’s reputation is to survive this fiasco he’ll have to do more than write another article for his website describing what others are doing to recover the project and monies stolen.
Berwick may also consider rehab and detox from a clear case of “Next Deal-Itis”.
Next deal-itis
In Berwick’s own words (9:40 – 10:17):
“At that moment in time with my business I was so busy and I didn’t have the proper help I needed. And I really wanted someone to kind of help me manage all these businesses that I had started up which is a problem that I sometimes have. I’m sort of a serial entrepreneur and sometimes I start too many things and I don’t do a good enough job in taking care of some of them as is what happened with Galt’s Gulch, to an extent. I didn’t take the proper care I should have for a project of that size and I put too much faith into one person who turned out to be a horrible person, in my opinion, and completely incompetent at running a business like that.”
After shaking hands with Cobin, Berwick hopped a flight and left “the details with his team”. Except there was no team except Johnson with whom Berwick had a long list of experiences that would have screamed “Danger!”, “Incompetence!” or “Psychopath!” had he been listening. The “details” he left in Johnson’s hands was a foreign land development project that would easily have overwhelmed the most disciplined, talented and honest of land developers.
Does anyone care if Berwick had too many irons in the fire, wanted to get on to the next deal having incompetently dealt with the current one, or that he was moving on to use his platform to bring money into a project into which the death-seed of Johnson had been firmly planted?
Berwick is a match for Robert Ringer’s “Builder-owner” Archtype:
“Builder-owners, bless their hearts, are a unique species. Not only do they not necessarily mean what they say, most of the time they don’t even mean what they think they mean. They live in an entirely different world from the rest of us—one that revolves almost entirely around “the next deal”—and they speak a language all their own. By now, though, I had learned to translate “builderese” doublespeak into English pretty well. For example, “I’m always willing to listen” more often than not really meant, “I’m desperate. Make me an offer.””
Yet Berwick takes it to a whole new level. He doesn’t even mean what he thinks he means when he’s not saying anything at all!
“At the time I thought that my silence on anything related to GGC over the last year would give enough people hints as to my happiness/involvement in the project that many would get the point. Unfortunately many didn’t.”
Perhaps that was due to Berwick’s appearance on Bloomberg during his “Year of Silence”. Does Berwick expect investors to be mind-readers watching his every move for silent cues?
Here’s a tip for those who suffer from “Next Deal-Itis”: The fastest way to move on to your next deal is to set up your current deal, properly.
Johnson Superman?
To focus on Berwick I pose the following question about Johnson:
What would Johnson had to have been for Berwick’s actions to have lead to a successful outcome for GGC? In other words, if Johnson had none of the deficiencies attributed to him, what attributes, skills, and experience would be necessary to develop GGC, alone?
Here’s a conservative list:
Experienced Land Developer.
Fluent in Chilean Spanish.
A “People-Person” par excellence.
Able to make complex decisions quickly, and alone, in a foreign country.
Able to handle his personal and business affairs with complete integrity.
A work-a-holic (In a good way).
In constant communication with all partners and agencies he was working with.
Experienced with money management and Chilean bank and currency conversion quirks.
Knowledge of local business customs.
Knowledge of local contracting services.
An extraordinarily talented project manager with impeccable self-discipline.
When reporting on “Simon Black” ceasing activity on “Sovereign Valley Farms”, Cobin speculates that “Black’s” undoing was the inability to find a land developer in Chile with the rare combination of talents, listed above. The talent, experience and character to manage the GGC project Berwick left Johnson to manage is rare, by all accounts. Finding it is the lynchpin of the success of such an undertaking. Berwick somehow concluded that he could fly away from such a complex land development project, to which his name was attached, and be a “silent” and detached marketer.
Marketing is King?
At the very least, Berwick’s behavior hints he values marketing over development rather than seeing both as crucial to the success of such a project. Development work, if Johnson ever did it, is full-time, tedious, and demanding. If Johnson had actually proceeded he would soon resent Berwick’s absence and detachment from the avalanche of real-world “details”.
If this is the kind of “builder-owner” Berwick aspires to be he has a role model in Donald Trump who’s been failing forward to his next project for the past 30 years. The bankruptcies are never personal, but corporate, so the association with failure is never clear.
A Regrettable Summary
In summary, Berwick has revealed himself to be an unworthy steward of precisely the kinds of “deals” he wants to do. What little Berwick did right with GGC wasn’t done in time to make a difference. Yet, Berwick doesn’t appear to want to “Do” anything but make a few calls and write another article on his blog hyping the next bing thing for his readers.
For Berwick’s reference I admit that passive partner “unicorns”, described below, do actually exist and appear from time to time. They tend to appear having done a remarkable amount of real-world due-diligence and with impeccable credentials.
Passive Partner Unicorns
A valid passive partner is a unicorn that appears when:
One’s reputation is so established that the reputation, itself, is a contribution to a business (A great example of this is Arnold and Sylvester’s contribution to Planet Hollywood: All they had to do is show up and let their name be used. Was it worth it to Planet Hollywood? Yes, that’s why they made the deal).
One has the ability to bring capital into a project (Berwick was apparently able to do this for GGC).
One can remove a major obstacle (Usually legal and artificial) from the path of the project (Payoffs, bribes, political manipulations, ad. nauseam).
For those doing the day-to-day work the important contributions of such unicorns may be frustrating. However, such contributions are often the deciding factors of success. The only real-life example I can think of, possessing all three attributes, is Doug Casey. That Mr. Casey is one of the few who’ve managed to create a “foreign” bastion of liberty is no accident.
Berwick will read this reference to Casey and retell his story about not heeding Casey’s advice to “Think very carefully” about what he was doing with GGC. Perhaps it’s best if Berwick cease all reference to his superiors. Consider referring to them only in private prayer during a sabbatical of priest-like transformation and the physical work required to provide restitution to those he’s deceived.
Berwick was able to attract investment capital based on his supposed involvement and recommendation of GGC. If he doesn’t keep his publicly made promises the days of anyone seeing Berwick’s involvement in a project as a positive factor, are over.
Berwick’s Way Out
The way out of this mess for Berwick is to keep the promise he made on Michael W. Dean’s radio show, Freedom Feens, on September 6th, 2014 at 38 minutes into the broadcast:
MWD: “The really big question, and I hope this doesn’t make you uncomfortable, but, apparently you encouraged people to invest in this. If you and them can’t be made whole through private arbitration or through the courts, with this guy, are you willing to do anything to help make those people whole?”
JB: Yeah, absolutely …. yes, I’m going to work the rest of my life, if I have to, to make this right.
MWD: “That’s excellent and very honorable.”
Berwick must also make good on his promise to John Cobin. Why? Because there’s not a libertarian on the planet who will trust Berwick until they know he’s made good with Cobin (And they’ll be asking Cobin about that, not Berwick). The GGC investors and participants don’t owe Cobin a dime. I’m referring to a personal promise Berwick made to Cobin. It was Berwick’s responsibility to fulfill that promise. If what Berwick had in mind was to be built in to the sales structure of GGC then Berwick should have done so prior to the first peso being accepted into escrow on lot options. Of course, there was no escrow as Johnson was using investment capital like a personal bank account. Berwick is just as responsible for that as Johnson as it’s something a normally functioning 50/50 partner would discover a few hours to a day after it started happening.
Cobin has been admirably forgiving to Berwick and will likely remain so. Those less forgiving than Cobin, however, will be watching his every move. If Cobin isn’t satisfied then he’ll remain the elephant in Berwick’s “International” room, for a long time. Berwick either makes it right with Cobin or he’s made the equivalent of a conscious choice to cut himself off of future capital to pay for his white linen suits, cigars and booze.
Berwick Isn’t Working with the GGC Rescue Team
In all references to the GGC rescue team Berwick is careful to point out he has no affiliation with them nor is he working with or assisting them, in any way. It seems odd for Berwick to be at arm’s length to the GGC team but that’s the way he puts it. I point this out because he’s already using the word “we” when reporting on the team’s success.
In fact, neither his promise to investors or to Cobin have anything to do with the work of the GGC rescue team. If Berwick thinks it does then he should be working with the team, full-time. Otherwise, he’s fallen back into sales-speak and is, once again, leveraging the efforts of others and claiming they’re his.
Berwick’s promise to Cobin was made before the property that became GGC was purchased. It’s not the GGC team’s responsibility to fulfill Berwick’s personal promises to Cobin. The same goes for his promise to work the rest of his life, if he has to, to make things right with the investors who invested in GGC because Berwick encouraged them to.
Do people who lost money on GGC because of Berwick have to be working with the GGC team, directly, to be made whole? In other words, do all the people Berwick mislead now have to work together, themselves, to fulfill Berwick’s promise to them? What about investors like Wendy and Brad who refuse to involve the state, in any way? They have every right to do so and yet are still covered by Berwick’s unconditional promise.
The GGC Rescue team is already doing the arbitration and court work Berwick says he’s got nothing to do with. What will Berwick be doing, personally, to fulfill his promises?
Did Berwick Lose Money on GGC?
See if you can tell after reading what he wrote about that:
“They told me to just take my losses (my total losses of expenses, loans and money taken by Ken that I had given to him in exchange for a separate deal that he reneged on is approximately $500,000).”
“A separate deal that he reneged on” isn’t GGC money. So, what were Berwick’s direct losses on GGC? Based on what Berwick has written I don’t think it’s possible to know.
Public Apologies are Not Restitution
Public apologies are an excellent first step in what Berwick refers to as “Penance“. Yet, Apology is the easy part of penance. What follows should be consistency and the work of restitution. The work of restitution comes when one stops talking and starts restituting.
Those who’ve lost money on GGC surely hope the “work” Berwick is referring to doesn’t begin and end with another apology or article about what the GGC team is doing. The direct relationship between words and deeds may be too much for Salesman Berwick to comprehend. If so, the tragedy for Berwick has only just begun with the publicity of his regrettable behavior with regard to GGC.
Berwick refers to at least one investor with a family now living in his car having invested his life savings in GGC. Why wouldn’t such an investor be living in Berwick’s “house on the hill” in Acapulco?
Berwick is a young man and I’d prefer to err on the side of optimism for a future that is completely dependant on his own thoughts and actions. This period of that life requires a priest-like transformation and fulfillment of his personal promises. The appropos demeanor and perspective is that of Paul Newman in “The Verdict” where Newman’s character knows his entire life depends on the outcome of the case he’s working on. In desperation, Newman repeats to himself the prayer-like mantra of: “There are no other cases. This is the case!”
Hey, Jeff! There are no other cases. This is the case!
Fielding softball “International Man” questions on Bloomberg on behalf of the libertarian crowd is a walk in the park compared to keeping real-life, publicly made promises.
Johnson’s Way Out
The way out for Johnson is his next deal. Just like he did with the last one, before meeting Berwick, Johnson will disappear from Chile and reappear somewhere else on the globe with a new story and a rapidly moving mouth. Here’s Johnson in 2010 talking to a child about wind turbines:
Johnson’s whereabouts are unknown (As of 1/8/14). My guess is he’s in Paraguay holed up in a hostel with a backpack of booty stolen from GGC.
From Johnson’s point of view GGC was a resounding success. After all, where did all the money go that no one can find? Whatever Johnson got is money he didn’t have or earn. His living expenses were paid for the three years he was tying GGC capital in knots. How many three-year cons does Johnson have to pull for the string of victims to pay his expenses for the next 20 years? GGC was a big score for him. One or two more and Johnson can live off the booty for the rest of his life . . . if he can stop his mouth from moving.
What, no talk of justice for Johnson?
Most probably, not. Or, perhaps you’re empathizing with Johnson and tempted to cite his anguish and fear. And, what about the persecution of being on the run and being hounded by state officials or the GGC team trying to bring him to justice?
Nah, Johnson doesn’t feel any of that. To the extent you believe he does you’re ripe for being fooled by the next “Johnson”. If you want to understand a psychopath you don’t get there by empathy. You get there by studying them like a spider in a jar. What you’ll learn is that the only way to win is to not play with them. If you have them in a jar, don’t let them out.
As light-hearted as Ayn Rand tried to make the fictional “Galt’s Gulch” it felt stiff to me. The biggest thing it had going for it was the reflective shield that made it invisable from the air. If one has withdrawn into the right country the best camoflauge is to blend in and be the gentleman, or lady, you are. Beautiful manners and graceful comportment make life wonderful and increase the liberty of those who rise to every occasion to show them. Excellent company doesn’t grow on trees but, the odds of finding it increase when you become the excellent company you seek.
Manage your engaged withdrawal, well, and you won’t be alone for long.
This is the last of the GGC series unless there are further developments that warrant commentary. If anyone connected to this incident may offer corrections, omissions, or suggest additions to what has been written, please contact me.
Galt’s Gulch Chile — Story, Timeline & References
See Part One to read this series from the beginning, Galt’s Gulch Chile — Story, Timeline & References. Or, forget about all this and see my short, “Two Paragraph Expat Guide to Chile“.
Contracts are Good for Libertarians, Too
By Terence Gillespie January 1, 2015
This is part three of a series offering constructive criticism of the Galt’s Gulch Chile land development deal. To come up to speed on the story, see part one: GGC Story, Timeline & References. For the root cause of the current problems, see part two, “The Creature from Galt’s Gulch“.
Is it news to anyone that conflict can arise even among those with similar political and economic philosophies? Agreement in these areas doesn’t guarantee the same on strategy, tactics, management, work habits, personality, style, etc. Contracts —and the time it takes to iron them out— can provide insight into these unique aspects of potential partners. You are “working together” the instant you begin to capture thoughts on a scratch pad. While clarifying business goals it’s wise to reflect on an important question: “Can I work with this person, this team?”.
Partners worth having know that contracts don’t resolve conflicts or solve problems, people do. And yet, those same partners would welcome the clarity that a contract can bring. The offer to put one in place won’t chase quality partners away. It will attract them to those who take their time and vision seriously enough to write things down.
Even the best contracts are for clarity at the beginning and clarity at the end. Clarity at the beginning is the shared vision of the partners and what each is expected to contribute and receive while working towards that vision. Clarity at the end is the shared vision for when and how to end or sell what’s been created. In between, it’s the talent, work, and enlightened self-interest of the people involved that creates, works, produces and resolves all things. Even a hint of invoking some penalty clause in a contract destroys the creative atmosphere.
The GGC deal soured due to the psychopathic behavior of a partner in a key role. Would a contract have prevented that? No, but slowing down and taking the time to document the supposedly shared vision of Cobin, Eyzaguirre, Berwick, and Johnson might have revealed that they didn’t share the same vision. Or, it might have flushed out Johnson revealing him to have no credible experience. Even an experienced land developer would face a steep learning curve to work his craft in Chile. That learning curve would be over and above speaking Chilean Spanish, fluently.
Berwick was able to attract investment capital only to fund Johnson’s incompetence and theft. Slowing down to draft a contract may have revealed Cobin to be the best candidate to do the accounting and disburse funds for the project. It might have also enabled the partners to learn from the best practices of other land developers. Money for such projects is typically disbursed in increments upon reaching milestones. Even upon reaching such milestones funds are only released by signature of all partners. These standard practices are in sharp contrast to the way money appears to have been “controlled” at GGC: Johnson using investment capital as his own personal bank account.
The Contract and Natural Law as Rules for Self-Government
Most deals are conducted successfully with no escalation to any party other than those involved in the original contract. The public learns only about projects that attract the attention of the media. The public does not learn about the billions of successful deals conducted with only the original parties because those deals involve no conflict. Stories with no conflict are stories that don’t get written.
Detractors accuse anarchists of not being able to deal with one another in the absence of government. What such detractors don’t realize is that anarchists welcome the presence of government in its superior and necessary form: Self-government. It is the absence of self-government usually at the heart of conflict.
Unless the physical laws of the universe are suspended there will be rules governing any deal. The rules are those of natural law and those in the contract. Anarchy is the absence of rulers, not rules.
Ideally, the contract contains only pertinent rules for the agreement that aren’t already covered by natural law. These rules, combined with the looming presence of the self-government of the parties, are ample ingredients for resolving all conflicts without involving the state. If natural law, the contract, and the self-governance of the partners and participants is not enough then the penalty will be as expensive as involving the state in the affairs of the project. That expense begins with the cost of making the contract state-compliant.
Mediation First, State Courts as an Avoidable Alternative
“…unity in what is necessary, liberty in what is not necessary, in all things charity.”
—Archbishop of Split (Spalato) Marco Antonio de Dominis in his anti-Papal De Repubblica Ecclesiastica in 1617.
Many libertarians, and all anarchists, believe the state to be unnecessary. Unfortunately, a project in which all partners are united in this belief is rare. A practical alternative is to make the contract bind the parties to arbitration first and state agencies only as a last, and penalized, resort. Even a partner insisting on “state protection” would prefer the more efficient alternative of arbitration to resolve contractual issues rather than “escalate” to the state, immediately. An added bonus to this approach is the screening of partners, in advance, who probably wouldn’t abide by arbitration no matter how fair or cost-effective its track record. A drawback is the contract has to be drafted in compliance with the national legal system. The most common types are:
Civil – Chile and most of South America
Common – Most of North America
Plural – Civil and common – Puerto Rico, Scotland, Louisiana
Sharia – Egypt
Civil and sharia – Morocco, Jordan
Common and Sharia – Malaysia, Pakistan
Johnson and Berwick made a big deal out of GGC being the first real estate deal to accept bitcoin as payment. While most libertarians welcome the use of alternative currencies they present a problem in maintaining state “valid” contracts: Most jurisdictions require “consideration” be provided in state currency. Therefore, it may be necessary to stipulate an exchange rate for all non-state currencies.. A payment of X-bitcoin, for example, would be deemed as equivalent to having given Y-amount of state currency for the sake of consideration.
Privacy is Not Partner Leverage
Libertarians place a high value on privacy and need not be left out of business opportunities, as a result.
Privacy is a means to protect oneself against unscrupulous characters, usually the state or litigious opportunists (Or do I repeat myself?). It’s not “license” to misbehave or a weakness to be exploited by partners. If you’re so private that your desire to remain so could be used against you as leverage then either use a nominee or represent yourself on behalf of an entity you’ve created to hold the proceeds of the partnership. If you can afford it, do both and make the nominee your lawyer. If not, then represent yourself as the executive of the entity. That’s enough hiding, the partners your dealing with can’t use it against you and you can transfer or sell your interest in the partnership, as needed.
On Berwick’s second trip to Chile he made a point of asking Johnson to confirm their partnership in the presence of a “financial advisor”. That’s the kind of thing someone with a partner agreement wouldn’t need to do. Therefore, I infer that Berwick and Johnson had no partner agreement to document their verbal agreement. Such would also explain the ease with which Berwick describes himself as slipping in and out his affiliation with GGC. I suspect Berwick was attempting a kind of lazy man’s privacy and flexibility by conducting business with nothing written down. Johnson would have seen this as a moth sees a flame.
Documented agreements facilitate recognition by third parties. If either partner would balk when asked to write things down it’s a sure sign of problems down the line. Ideally, recognition would only be made to a private mediator empowered by the agreement. Having such an agreement should in no way be seen as involving the state in disputes. Quite the contrary, the agreement outlines the relationship and clarifies expected behaviors between the parties to keep things running smoothly. It also specifies the resolution of any problems accomplished by a private third-party. Such agreements are an important means of keeping the state out of one’s business. If all else fails, the clarity with which you’ve outlined the agreement might help state agencies exceed their usual incompetence in handling complex matters.
Libertarian Version of 1 Corinthians 6
Contrary to popular belief, the state has no stable of magicians able to create unity or to judge complex matters, fairly. To the contrary, state agencies are inferior to a random sample of unbiased mediators. As the disciplined and fair actions of the GGC rescue team have demonstrated, the state is even likely to be inferior to a biased sample of those directly involved in the conflict!
In refusing to involve the state to resolve their part of the GGC dispute, John Cobin, Wendy McElroy and her husband, Brad, have shown remarkable integrity. They’ve demonstrated, at great personal cost, the high-caliber of behavior, the meticulous self-governance, required to resolve the most complex and intractable disputes without involving state agencies.
Johnson used investor capital in a maze of land and state entity swaps so it will be impossible to rectify the situation with no state involvement , whatsoever. The best course of action for GGC participants is probably to give their proxy to the GGC rescue team who, in turn, may attempt to overturn the various entity swaps of Johnson’s theft.
I find John, Wendy and Brad’s behavior admirable because it is the kind of excellent behavior necessary to keep the state forever out of private affairs. More such behaviors are described in 1 Corinthians 6. In quoting the passage, below, I’ve made five replacements to make it accessible to a larger audience. The original words are next to the replacements for reference. The spiritual beliefs of the reader are of no importance in making the point.
1 Corinthians 6: 1 – 8
“When one of you has a grievance against another, does he dare go to law before the state/unrighteous instead of those who love liberty/the saints? Or do you not know that those who love liberty/the saints will judge the world? And if the world is to be judged by you, are you incompetent to try trivial cases? Do you not know that we are to judge angels? How much more, then, matters pertaining to this life! So if you have such cases, why do you lay them before those who have no standing in liberty/in the church? I say this to your shame. Can it be that there is no one among you wise enough to settle a dispute between the brothers, but brother goes to law against brother, and that before statists/unbelievers? To have lawsuits at all with one another is already a defeat for you. Why not rather suffer wrong? Why not rather be defrauded? But you yourselves wrong and defraud — even your own brothers!”
Libertarians or anarchists working towards a world where people may conduct all the transactions of life without the involvement of the state might consider this passage. I find it hopeful and instructive. Hopeful, because it hints that such a world is possible. Instructive, because it describes some of the excellent behaviors necessary to make it so.
See Part Four, Jeff Berwick and Galt’s Gulch Chile: A Regrettable Summary, for:
Next-Deal-Itis
Or, forget about all this and see my Two Paragraph Expat Guide to Chile.
The Creature from Galt’s Gulch
By Terence Gillespie December 17, 2014
Chile is on the short list of ex-pat locations for my family. We’ve been vetting countries for the past eight years and are far along in the process with second passports and visa’s in hand. Such documents are probably a luxury but exploring that question is for another day. In this article (Part Two) I offer perspective and constructive criticism of the Galt’s Gulch, Chile (GGC) land development fiasco. To come up to speed on the story, and for reference while reading this article, see Part 1: Galt’s Gulch Chile — Story, Timeline & References.
This fiasco has little to do with the Randian, libertarian, or anarcho capitalist ideals referred to in the marketing hype. The social, political and economic philosophies, purported to be at the heart of GGC’s failure, are only now coming into play in the attempted rescue of the project. What killed the deal was what kills most deals: The psychopathic behavior of a partner in a key role and the inability of the other partners to recognize and eject him in time. A contributing factor was Berwick’s silence, yet continued marketing hype, despite direct knowledge of egregious mismanagement and theft. Another contributing factor was the support of Johnson by investors who, understandably, needed more time and evidence to be convinced of the extent of Johnson’s misdeeds.
I’m being quite careful in my use of the word “Psychopath“. I am not a mental health professional or qualified to make a clinical diagnosis. However, “psychopath” is the word Berwick uses, in public articles and radio interviews, to describe Johnson. After studying all public documents my layman’s opinion is that, to Berwick’s credit, he is correctly naming Johnson’s pattern of behavior and that it is consistent with the testimony of multiple eyewitnesses.
The world is full of successful “libertarian” projects. What distinguishes them from GGC is that the political-economic philosophies of the participants were not the primary marketing lure of the project. Because Galt’s Gulch dared to use a famous Randian catchphrase the fact that it was taken down by a psychopath, like most deals are, is becoming associated with the philosophies of those involved. In fact, the philosophies and aspirations of the investors and participants in GGC had no bearing on its failure. They simply failed to spot Johnson’s egregious behavior, in time. According to eyewitnesses (John Cobin, Jeff Berwick) Johnson had no grasp, whatsoever, of libertarian principles prior to his involvement in GGC. It remains unclear what principles, if any, might explain Johnson’s predatory, aggressive and anti-social behavior.
Natural Law Prevails, Naturally
Much has been made of the irony of anarcho capitalists having to rely on the state for justice when deals go awry. No such thing has yet to occur with respect to GGC. In fact, the state has done nothing to restore funds, order or justice to GGC participants. The only entity to make progress on those fronts has been the GGC participants, themselves. Specifically, the GGC rescue team, a band of investors and members who have a personal and financial interest in restoring order to the project.
On October 23, 2014, the GGC rescue team met with private attorneys and security at the Santiago airport and were able to garner local support of their restorative efforts. What garnered their support, and made the GGC rescue team’s efforts successful, was their restorative intentions and the ground they held: The moral high ground. The locals were convinced the team had given an honest account of the situation and had the intention and means to oust squatters, clean the place up, meet payroll for the farm workers, restore utilities, and bring accounts current. Using private funds the rescue team proceeded to do all that they had promised.
I care because I’m a libertarian interested in living in Chile. In public articles and extensive comments about GGC, thus far, I see stories, facts, and the usual name-calling from the uninvolved, but little to no constructive criticism.
I care because this deal is being cited as “proof” that libertarians are unable to trade with one another in peace without resorting to state agencies.
I care because libertarians have long-term concerns about the negative exposure GGC might bring to perfectly great ideas such as not aggressing on one another and letting free markets reign:
“That is why people like me are so pissed off. Berwick has not just defrauded people. He has discredited the anarchist movement, the start-up community movement, and discredited authors like Wendy. He played right into the Marxist stereotype of what a venture capitalist is: the Zeitgeist people and the socialists are going to have a f*)#$& field day.” —Jack O’Brien commenting on Berwick’s first public Mea Culpa “communique”.
I care because the simplicity of flying to another country to live, for a while, is becoming associated with the tar pit of foreign land development. One has nothing to do with the other.
“As long as there are nations, changing your nationality should be as easy as changing your cell phone plan.” —Michael W. Dean, Freedom Feens Radio Show & Podcast.
I care because what every businessman, and especially libertarians, should be learning from this fiasco is that people can’t do anything in peace with a psychopath running the show. Recognizing them in time and screening them out, in advance, is crucial for human liberty and success.
Chile and Me
My first trip to Chile was for seven days in 2011. My wife and I liked it so much I went back in 2012 with a friend and spent 17 days scouting most of the country from Northern Patagonia to Santiago. My libertarian friend and I split the costs of rental cars and hotels and drove wherever we wanted for over three weeks. By the time it was over we’d vetted every place in Chile that would meet the needs of our families.
A Dryer Sonoma, CA — Ideal for GGC’s Demographic
The location for GGC is a dryer version of Sonoma, California. Those familiar with Sonoma know that it can be quite dry in the summer. The location for GGC is dryer than that. Chile is one of four places in the world with a perfect Mediterranean climate. The borders of the country enable the luxury of dialing into that perfection by going north (For hotter and dryer) and south (For colder and wetter). Since my subjective view of perfect climate is a little cooler and wetter than the GGC location (33° 16.287’S, 71° 7.284’W) my preferences are south of Santiago.
Though the location is dry for my taste it’s ideal for the target demographic. Between the ocean and Santiago, and nestled in (Dry) wine country, it would meet the needs of jet-set ex-pats and self-sufficient” preppers, alike. The near perfection of the choice of location is no accident but that of long-time Chilean resident, John Cobin (Not Jeff Berwick, et. al.).
GGC Office – GE
Nothing to See in December of 2012
Much like today, there wouldn’t have been much to see of “Galt’s Gulch” on my last trip to Chile in December 2012. My wife and I had breakfast in Curacavi in 2011 on the way to Vina del Mar and enjoyed a wine tasting tour of the Curacavi. area. In December of 2012, If my friend and I had known about GGC’s marketing existence, we would’ve skipped it, anyway. We were both familiar enough with the road, vineyards and terrain between Santiago and Vina Del Mar. The only point in making such a drive would have been to meet John Cobin. My friend and I wanted to see the entire country, for ourselves, before doing that. Here’s the view from a small plane flying in and out of Curacavi. GGC is 17 kilometers north of the city in the surrounding mountains.
John Cobin is the Real Deal
John Cobin is the talent behind the discovery of GGC’s ideal location, the business plan to develop it, and more: Chile, itself, as one of the best alternatives for liberty in the southern hemisphere. He ranks those alternatives, in order, to be Chile, Panama (A distant second), Colombia (Could be the new Chile in 20 years) and then New Zealand though says one would have to distinguish between economic and social freedoms to make a personal choice.
Cobin moved his family and six children to Chile in 1996 and has written four books about living in Chile. I read his “Life in Chile – 2011 Edition” prior to the second trip and can vouch for its accuracy and expansive detail. Although Chile remains Cobin’s #1 choice he pulls no punches about the difficulties of living there. It’s hard to read, at times, as he dispels romantic notions that are hard to let go of when one is still wallowing in the excitement of the journey to such a magical place. In the end, however, Cobin’s honesty makes Chile even more enchanting because he makes its magic accessible. Cobin has been to every city in Chile with at least 500 people. This volume of exploration, combined with his knowledge of economics and politics, gives him a remarkable grasp of the country and the pros and cons of each area and village.
Any libertarian who had done a half-hour’s research into Chile would have discovered the wealth of information Cobin has made available online for free to those interested in living there. It should be no surprise to potential ex-pats or GGC investors that Cobin is at the heart of all the good parts of the original deal. What I find surprising is there are no public references to investors absorbing Cobin’s material as the low-hanging fruit of their due diligence.
Cobin and GGC
Cobin found the land, made an extensive business plan, was making calls to possible investors (This is how Berwick found out about the deal) and had partnered with Eyzaguirre to formulate a plan to unlock the all-important water rights and subdivide the land. Cobin referred to the project as “Galt’s Gulch, Chile”.
One of the keys to understanding Cobin’s rather perplexing involvement of Berwick and Johnson in his project is Cobin’s recognition of his limitations. He is an academic professional and author and inexperienced with raising the significant amount of capital required for his business plan. Cobin saw Berwick as a plausible means of raising such capital and made a straightforward agreement with Berwick and Johnson to do so. Cobin had them sign over power of attorney so he could act on their behalf to create a holding company and bank account. Cobin and Eyzaguirre were to receive a $250K finders and negotiation fee (Later increased to $285K) for property #1 (El Penon) and 20% of the holding company. Shortly after agreeing to these terms Berwick left Chile leaving Johnson to do the “land development” work of their partnership. Cobin and Eyzaguirre were about to cut through the Chilean maze of unlocking and inscribing the water rights when Johnson went, inexplicably, incommunicado. Contrary to all agreements Johnson created an entity that only he controlled and used money that Berwick attracted as investment capital to take title to the land. Unable to speak Spanish, and with no local or administrative experience, Johnson, predictably, bungled the process for aggregating and inscribing the water rights. Although Johnson cut all ties with Cobin he blames Cobin for “finding a property with no water rights”. Johnson then proceeds to spin a bizarre web of land, stock and company swaps and, with no money to spend, commits to the purchase of a second property for $6 million dollars. This is property #2, El Lepe. Fast forward to today, 12/17/14, and the GGC rescue team is still trying to unravel Johnson’s bazaar web.
The Talent Left the Building
When Cobin was betrayed by Berwick and Johnson the talent to make the project happen, namely Cobin and Eyzaguirre, left the building. Cobin and his partner knew what had to be done to unlock the water rights, subdivide the parcels and assign title to the lots to make them transferable for purchase. They were cordial and on honorable terms with the locals, spoke Chilean Spanish(!) and familiar with the quirks of accomplishing administrative tasks in Chile. Johnson, who Berwick left “in charge” of their purported partnership, had none of these advantages and was a poor candidate to accomplish anything in Chile (Or his native country judging by Berwick’s description of his awful behavior while working for TDV).
From what I can gather it appears the GGC Rescue team will, eventually, have to come to some kind of agreement with Cobin for the original GGC deal on property #1. They may as well accept what Berwick understood from the beginning: Cobin and Eyzaguirre’s insight and expertise are crucial to turning this dream into reality. All agree the project must be renamed as part of the restoration. However, merely throwing more money into the deal without also adding talent commensurate to Cobin and Eyzaguirre’s will not be the ingredients for progress. Even if the right balance of talent and money is struck one can only hope that Johnson hasn’t soured the local taste for gringos.
Freedom Orchard?
Freedom Orchard is what Cobin and Eyzaguirre had to rename their separate land development project after Berwick and Johnson co-opted, and ruined, the GGC name. This is probably a blessing for Cobin as Chileans have a hard time saying “Galt’s Gulch” and Cobin’s original vision was not for the project to be exclusively libertarian but open to everyone. Adding to the confusion is that some of the photos on the GGC website and Facebook page are photos of Freedom Orchard and neighboring farms. Freedom Orchard is a separate property, better located and more fertile, directly south of GGC property #2, El Lepe. Some confusion about the distance between GGC and Freedom Orchard has resulted from not distinguishing between El Penon and El Lepe. Driving North from the freeway one must drive through Freedom Orchard to get to El Lepe, first, and then to El Penon.
Red Hot Chile Radio- Liberty and Life in Chile with Dr. John Cobin
GGC and Freedom Orchard are discussed in the following episodes of “Red Hot Chile”:
8/29/14 – 24:50 – 53:00, 45:45 – How it all started.
9/5/14 – 41:00 – Quick interview of Berwick, 42:30 – Cobin and Berwick discuss the terms of the original deal.
9/12/14 – Cobin Interviews Berwick for most of the show.
GGC vs Freedom Orchard
Psychopaths are a Primary Adversary
An important lesson to come out of the GGC fiasco is for libertarians to learn how to spot this human adversary and screen them out of all affairs. With no conscience, the inability to empathize, a parasitic nature, the pleasure they derive from causing pain, and their affinity for seeking power over others, the psychopath has aggression at the core of their being. They can be relied upon only to throw a monkey wrench into every situation with which they are involved. Until they are removed, or screened out in advance, it’s an exercise in futility to attempt to accomplish anything.
Paul Rosenberg provides a great introduction to psychopaths and the importance of avoiding them in They Walk Among Us:
“Here’s the bad news: Predators walk among us, and they are indistinguishable from normal people. These differently wired humans have a predatory advantage, and they use it. This is not a plot from a scary movie; this is real. I am deadly serious about this, though by the end of this column, I will also explain why there is also good news. These predators are called sociopaths (psychopaths in the clinical literature). They rather seldom damage our bodies, but they make careers out of bleeding our souls.”
Every request is ignored, every admonishment reflected back to you, every task left undone, every responsibility shirked and blamed on someone else, every agreement pretended to never have taken place, when you find yourself dragged into a world of complete inversion… consider the possibility that a psychopath is “walking among you”. Learn how to spot a psychopath and the different types and terms for them.
I was impressed that Josh Kirley ran a background check on Johnson and that nothing came up that would alert investors. Perhaps such background checks should be supplemented with an informal check against the psychopathy checklist put together by Canadian psychologist Robert D. Hare. Another useful trick is to think of the psychopath’s story as a 3D illusion (An autostereogram) that can only be seen and believed by the victim when the mind muscle that controls focus is coaxed into relaxing.
The most common word Berwick now uses to describe Johnson is “psychopath”. I don’t fault Berwick for not recognizing Johnson as a possible psychopath. In fact, it’s a sign of normalcy to be confused by psychopathic behavior upon first encountering it.
What I fault Berwick for is moving forward with Johnson, or with anyone, who had behaved as badly as Johnson had leading up to the critical decision of partnering with him. A clinical diagnosis, or even a layman’s understanding of psychopathy, was not necessary for Berwick to know to walk away from someone lying about, and assaulting, his employees. No expertise is required to part company with a partner insisting that business begin with the selling of a product they don’t own. Berwick’s inability to put a name to Johnson’s behavior has nothing to do with his bad judgment in tolerating it.
Ken Johnson (Left), Josh Kirley (Right). Photo courtesy of Josh Kirley
That Johnson had behaved so badly, from any perspective other than his own, was a luxury that most who are first encountering psychopathic behavior don’t get. If Johnson is ever clinically diagnosed he will be seen, in retrospect, as an easy one to spot. Berwick, and libertarians in general, will need a more refined antennae to increase their batting average of avoidance. Berwick refers to the following warning signs prior to agreeing to the 50/50 GGC partnership with Johnson:
Johnson’s claim that “he could sell anything to anyone” is an admission of being able to lie with no guilt or shame.
Johnson was at odds with everyone in Berwick’s office and physically assaulted one of Berwick’s employees. Berwick would have been familiar with his own employees and, presumably, able to determine whether Johnson was lying or distorting facts about them.
Johnson wanted to begin their partnership by selling land neither owned or optioned. Even if they had an option on the land there were serious legal obstacles to overcome to make lots ready for resale. To Berwick’s credit, this was a point of contention that almost lead to a fistfight with Johnson. Perhaps it would have been better for future investors, and Berwick’s reputation, if some kind of gentlemanly fistfight had resolved the matter.
See Part 3 of this article for:
Mediation First, State Courts as Avoidable Alternative
By Terence Gillespie December 9, 2014
The story, timeline and references in this article (Part 1) were put together for reference in my next article (Part 2), “The Creature from Galt’s Gulch“.
All publicly available documents, articles or references to Galt’s Gulch Chile (GGC) are cited or linked to in this article as of 12/9/14. The best overall narrative was written by “someone who left a great life and a job, to move to Chile, in the hopes of building this ambitious project” and posted on The International Man Forum. I’ve added comments (TG:) to fill in or correct the narrative where I know it to be inaccurate or where perspective would be helpful.
As introduced by “Dave322” on the International Man Forum just before posting it on August 27th, 2014:
“A large number of employees and investors received the following email. It was sent by a producer for an American television programme, who happened to work at GGC, in its early days. They were looking for people to interview for an upcoming show they are doing. It is titled, “Kenneth Dale Johnson, The Bernie Madoff of Bitcoin”.”
TG: It appears the intended show was never made.
Following the narrative, below, is a timeline assembled by reading all GGC related documents and listening to all GGC related radio shows and podcasts, multiple times.
I am sorry to be the bearer of bad news, but you are receiving this email because of your investment in or association with Ken Johnson and Galt’s Gulch Chile (GGC). What follows is a brief time line of this project – a short summary of a much larger story that is still being written. This will be the first of many emails detailing the scheme of which you are a victim.
In 2012, Ken Johnson and Jeff Berwick (The Dollar Vigilante) explored the idea of creating a community in Chile that would appeal to people worried about the financial and political stability of their home countries. Chile, they believed, would be a welcoming home for those of a libertarian/anarchist and free market bent, much as Argentina is home to Doug Casey’s Cafayate. Turns out that John Cobin (Host of Red Hot Chile) and his associate German Eyzaguirre also had plans to launch a community In Chile. When Berwick and Johnson met Cobin and Eyzaguirre in Chile in late 2012, they decided to join forces. Cobin and Eyzaguirre had tried to purchase land near Curacavi – a plot of land referred to as El Tranque (aka Freedom Orchard) – but could not raise the funds to fulfill the contract. Cobin and Eyzaguirre helped Johnson find a tract of land nearby – Caren, known locally as “El Penon” for a large rock formation near the crest. In exchange for finding the property and helping to facilitate the deal, Cobin and Eyzaguirre would receive $250,000 and 30% of the shares of the holding company. Berwick and Johnson would evenly split the remaining 70%.
TG: Cobin and Berwick agree that only 20% of the shares of the holding company were to be assigned to Cobin and Eyzaguirre and the $250k finders/negotiation fee was later increased to $285K. They discuss this on Cobin’s 9/5/14 radio show, 42 min, 30 sec. Therefore, Berwick and Johnson could split the remaining 80% of the deal, not 70%. It is possible the 30% figure in this narrative was a direct quote from Cobin, Berwick or Johnson. However, the only recording I have is from the principles, themselves, who say it was 20%.
$1.75 million was raised from four Founders, known as the “First Round.” Within a month, the sale had been made for $1.18 million – the majority of the money that the four founders (funders) had put up. None of the founders was Johnson, Berwick, Cobin and Eyzaguirre, or any of his associates. They were just regular people who wanted to move to the proposed community.
TG: The only “regular” person in this group of four would have been Johnson, who ostensibly brought nothing but a moving mouth to the deal. Cobin and Eyzaquirre found a near perfect property, created a detailed business plan, suggested the GGC name, contacted Berwick through his TDV employee, Johnson, and persuaded them to start attracting investment capital for the project. Cobin also setup the holding company, negotiated the price/acre to be an amazingly low $270 US. For Berwicks part, all public articles about this project suggest it was his efforts that attracted the four founders to purchase the property. There were many subsequent “regular” people who just wanted to move to the proposed community but Cobin, Eyzaquirre and Berwick were not among them.
As quickly as the sale had been made, it was discovered that the land would be unsuitable for the promised development. They told the first rounders it would be subdivided into 3,000 parcels. Turns out it could only be divided into 12 parcels. And even those 12 had building restrictions due to the elevation and being zoned for agricultural use. To top it off, though there were water rights (surface only), there was very little water. Johnson failed to register the few wells that existed,within the required time frame, making matters worse. The entire deal was a spectacular failure. Johnson would later place fault with Cobin and Eyzaguirre for misrepresenting the possibilities of the land. That should have been the end of Ken Johnson’s tenure as developer or manager of a community of expatriates in Chile. Instead, it was just the beginning.
TG: The property had more than enough water through consolidated wells and dam water access, but Johnson, who didn’t speak Spanish or have any local contacts or knowledge of the process, bungled the clearing and consolidation process to get them inscribed to the property. Cobin and Eyzaguirre would have done all this had Johnson not gone incommunicado (See RHC Radio show, 9/12/14, 14 Min 30 sec.). The correct water inscription process, alone, would have increased the number of lots allowed in the subdivision and Cobin and Eyzaguirre had similar solutions at the ready to resolve other zoning challenges. Such is the nature of land development for which the involvement of Cobin and Eyzaguirre was crucial. Johnson’s pattern is clear: All obstacles he couldn’t overcome after cutting himself off from the talent were blamed on the talent. This is like blaming a broken pipe on a plumber whom you’ve never called! This insane pattern of blame is important to the psychopaths scheme: It elicits the sympathy of other parties who, having no time to investigate the situation, assume the psychopath has been wronged and is in need of help. In short order, all who even listen to a story are drawn into the web and even blamed, themselves, for one thing or another.
To rewind a bit, before the sale of Penon was registered to one of many legal entities tied to GGC, Berwick and Johnson managed to nullify their deal with Cobin and Eyzaguirre, and register title to the albatross Penon land to a Chilean entity – Inmobiliaria SA – that only they had 50/50 control of. Johnson’s swift move to oust Cobin would foreshadow Berwick’s own treatment by Johnson.
TG: What follows are the, possibly true, details of a series of purchases and land swaps that Johnson engages in after bungling almost every aspect of the first property deal of El Penon. I find it unnecessary to follow Johnson’s rabbit trail in order to learn most of the important lessons from this deal. I will interject comments only if I can clarify something or know that something has been written is not true or described, poorly. I have no direct knowledge of all these swaps so must leave the accuracy of these descriptions to the original author who remains unknown to me as of 12/9/2014.
In a display of pure brass, Johnson doubled down and found another property adjacent to El Tranque and Penon: a land known as Lepe. Without a penny to his name or a single investor, he negotiated a cash deal (to be paid in installments), agreeing to pay a staggering $6,850,000.00 USD for land and water rights. Now, why would the seller, Guillermo Ramirez, make a deal with a total stranger, from a foreign country, who had no money and no reputation? In short, he did so, because Johnson was offering him nearly 4 million dollars more than the price he had already agreed to sell the land for (to Cobin and Eyzaguirre). Locals were astounded by the price tag. Some allege there was a kickback scheme between Ramirez and Johnson; this theory is buoyed by the fact that in addition to the inflated purchase price, Ken Johnson was to issue a 5% stake in Galt’s Gulch Chile to Mr Ramirez, when payments were completed. Still others believe this is just another case of a foolish Gringo being taken by a wise local who grossly overstated the value of the land, the profitability of the farm, and the amount of water. (Johnson would later exaggerate these already inflated figures to potential clients.) The actual amount of water is not known because Johnson, for a second time, going against the advice of his paid legal counsel, performed no due diligence. Not a single water test was performed.
On both El Penon and Lepe, Ken Johnson paid a premium and did no due diligence. He did not sufficiently verify the zoning status or perform water tests, either time. And he did not commit a cent of his own money to either purchase. The same can be said for Cobin, Eyzaguirre, and Berwick. Since Johnson had no skin in the game and he was not a public personality like Berwick, Casey, Black, or Cobin, he never had anything to lose. And, he would behave accordingly.
TG: Cobin, Eyzaguirre and Berwick had money, time and reputation “skin” in the game, in my opinion. From what I can gather, Berwick had the least money and time (And expertise) at risk but his reputation was more at risk than any of the others. I have no idea why the author of the letter refers to “Casey”, presumably Doug Casey, in the paragraph above. The only time Casey’s name comes up, at all, in this drama is Berwick’s mention that Casey told him in a personal conversation to “think very carefully” about what he was doing. Berwick later laments not heeding Casey’s advice.
At one point, the lawyer for the New Zealand trust – Evgeny Orlov – described Johnson’s behavior as follows: “Ken has accused almost everyone I know of extremely serious things when he appears to be playing with his investors money like a child in a sandpit.” (2/26/14).
Ken Johnson partners with someone, uses their money, time, reputation, and resources, and when they are no longer of use to him, he discards and vilifies them. And even though Ken Johnson has been the sole director of Galt’s Gulch Chile since inception, he has taken no responsibility for its continued failure and downward spiral. It is always everyone else’s fault.
TG: An excellent description of Johnson’s overall pattern. Please take note of this pattern as it relates to The Creature From Galt’s Gulch.
In April of 2014, Johnson showed his true self and his true motives. Even though he was not paying his investors, his employers, his contractors, or the landowner, he negotiated to purchase 51% of a company called Rio Colorado from a local “businessman” who had worked for the Chilean IRS: Mario Del Real. Johnson agreed to pay del Real the mind numbing sum of $8.1 million USD. This was to be a private, personal purchase for the sole benefit of Ken Johnson, having no benefit for, or relation to GGC.
TG: Cobin was called by an interested party and told “These guys are gonna kill each other!” referring to Johnson and Real who were apparently living together at the time. See Cobin’s radio show of 9/12/14.
TG: Yes, “let that sink in” and see my next article on the subject.
TG: If these swaps and giveaways can be overturned for lack of consideration of the parties there may be some hope in the above paragraph.
Who owns GGC? Who is the managing director? Who holds the bank account or accounts that new investor money flows into? Who is the sales director? Who is the general contractor? Who is the accountant? Who is the attorney? Where are the financial records? Why has a master development plan or business plan not been created or approved? Why have farm and orchard owners not received dividends? Or any information, for that matter? Press Ken on why he has not fulfilled his repeated promise to turn the project over to the clients, whose money he squandered, in the percentage that they invested.
TG: I appreciate your loss and efforts to document your point of view in this letter. Please contact me if you have anything to add to this post or would like your name attributed to it, here.
Once he is removed, there will be a great deal of messes to clean up. Johnson has made enemies around the Curacavi region, in Santiago, the United States, and on four continents. He did this in the name of GGC. Whether it is through active marketing or total rebranding, the damaged parties need to know that there has been a clean break between Ken Johnson and the people he purported to represent. Finally, he needs to be replaced.
TG: The GGC Rescue team seems to have agreed with your assessment, here.
TG: Experience, references, bilingual, local, knowledge of local culture and with skin in the game? That’s another way of saying that Cobin and Eyzaguirre were a crucial part of the original deal and it went off the rails, in large part, due to their involuntary absence. One may then ask a rhetorical question: Of what use is investment capital applied to the recovery of this project if it is lacking such qualifications?
Timeline & References
Late Spring (May?), 2012: Berwick meets Johnson at a conference in Palm Springs
July 6th, 2012: Representing The Dollar Vigilante at Freedom Fest in Las Vegas, Ken Johnson says, “Getting A Second Passport Has Never Been Easier“.
July 11-14, 2012: Johnson claims to have met John Cobin at Freedom Fest in Las Vegas. Cobin describes a property in Chile to Johnson “because he knows Jeff Berwick is interested”. As Cobin clarifies later with Berwick on his radio show, the meeting was by skype and Cobin’s interest was in obtaining investment capital to move his already formulated business plan for Galt’s Gulch Chile (Cobin’s Name, plan and location) forward. In other words, prior to Berwick or Johnson setting foot in Chile for the first time Cobin, who has been in Chile since 1996, is making calls to attract investment capital to his project.
August, 2012: After Freedom Fest and Before their trip to Chile Berwick has problems with Johnson running sales and business at TDV. Berwick decides it’s best for Johnson to focus on sales at TDV while limiting his contact with people(?). Johnson spends the month trashing well-known and good employees at TDV and physically assaults one of them.
September, 2012: Johnson goes to Chile to meet with Cobin and see Property #1, El Penon, 17 Kilometers north of Curacavi Berwick flies to Chile for the first time in his life to join Cobin and Johnson and see the property.
September 30th, 2012: Berwick and Johnson meet with Cobin and partner in Santiago to discuss the land and Cobin’s detailed development plan for what Cobin refers to as Galt’s Gulch Chile. During the dinner meeting Johnson and Berwick almost get into a fist fight over strategy and ethics. Even so, shortly thereafter Berwick agrees to be 50/50 partner with Johnson on 80% of the deal with a $250K finders and negotiation fee due to Cobin (Later raised to $285K) with 20% ownership in the holding company retained by Cobin and Eyzaguirre.
October 14th, 2012: Cobin forms Galt’s Gulch Chile SA (GGCSA) and opens a bank account. This is a partnership of Cobin, Eyzaguirre, Berwick and Johnson formed to hold and develop all lands purchased for Galt’s Gulch Chile.
October, 2012: Berwick departs Chile leaving Johnson to do the Real Estate work of their partnership to be funded by money brought in by Berwick’s marketing efforts on TDV. Listen to Cobin and Berwick describe the details of their meeting and partnerships on Cobin’s Red Hot Chile radio show on the 9/5 and 9/12/14 episodes.
November 14th, 2012: The four partners have a meeting and informally agree to dissolve the company GGCSA. However, Cobin is due $250k for finding the location, negotiating the price of the land and creating the initial business plan. He most likely would not have to signed any dissolution documents until being paid for his services. Indeed, GGCSA is not formally dissolved until 8/30/13 when Berwick and Johnson realize they can dissolve the entity without Cobin’s cooperation due to their majority share ownership.
November 30th, 2012: Johnson forms his own personal entity, Inmobiliaria Galt’s Gulch S.A. (IGGSA). Johnson and Berwick have a verbal agreement they are 50/50 partners but Berwick is not listed as a principal in the corporation nor is he listed as a director or a shareholder.
December 12th, 2012: El Penon is purchased by IGGSA from Sarrazin. IGGSA is an entity that is 100% personally owned by Kenneth Dale Johnson. As Johnson never informed the first four investors that he was the now the only one involved in the project. This is a material ommission as the investors still think that all four of the original partners are involved in GGC.
January 3rd, 2013: El Penon is registered to IGGSA.
January, 2013: The investing “GGC Founding Fathers” are attracted to the project by Berwick’s marketing efforts and supply the money for property #1 to be purchased. Johnson breaks contact with Cobin and registers the property to an entity owned and controlled solely by himself. Johnson then bungles Cobin’s detailed instructions to consolidate and inscribe the water rights on property #1 within the 90 day period allowed. To cover-up his bungling, Johnson accuses Cobin of having recommended a property that doesn’t have sufficient water rights for the project. In fact, the property has more than enough access to water but Johnson, who doesn’t speak Spanish, is unable to the navigate or comprehend the consolidation and inscription process to get them assigned to the property.
April 26th, 2013: Johnson’s lawyer, Jose Cordoba, officially gives all shares of IGGSA to Johnson and none to Berwick.
April 30th, 2013: Johnson tours El Lepe with its owner, Ramirez.
May 13th, 2013: El Lepe Deed of Sale by IGGSA, Closing on El Lepe doesn’t happen until 8/14/13.
June, 2013: First GGC “sale” after the first four investors.
October, 2012 to November 2013 (Best guess): “Since I had already brought in thousands of leads to GGC throughout 2012 and the start of 2013 and Ken had begun to market this new property that GGC didn’t even own I was very distressed.” Nevertheless, Berwick continues to market GGC on TDV. Those who trust Berwick think he’s intimately involved in GGC and many invest their money, as a result, including Wendy McElroy.
June 2013: Berwick gets an alarming e-mail about a purchase Johnson has initiated and flies down to Chile with his financial advisor. Johnson assures Berwick that they remain 50/50 partners.
July to October 2013: Berwick continues to market GGC.
August 14th, 2013: El Lepe purchase from Ramirez by IGGSA closes.
August 30th, 2013: Berwick and Johnson realize they can dissolve the original partnership with Cobin and Eyzaguirre becaues, together, they have a 70% quarum of ownership of the entity. Thereyfore, they didn’t need cobin and Eyzaguirre to close the entity. However, they still owed Cobin and Eyzaguirre the money they promised and the value of the partnership shares they owned.
November 2013: GGC has it’s first event to which Berwick is not invited. However, someone hired by Johnson assumes Berwick is to receive an invitation and sends him one and he attends the event. Attending the event are Josh Tolley, Ben Swann, Angela Keaton, Luke Rudkowski, Jordan Page and Bob Murphy.
November 15th, 2013: Jeff Berwick on Galt’s Gulch Chile and Bitcoin on Bloomberg TV.
December, 2013: Josh Tolley Interviews Ken Johnson on the Josh Tolley podcast.
May, 2014: The founders conclude that Johnson was not only lying to them but had not even given them the shares of the company in which they had invested in more than a year and a half earlier and had begun treating them like enemies.”
August, 2014: Wendy McElroy documents her experience explaining that she and her husband were defrauded as were other sophisticated investors.
August 27th, 2014: Berwick tells his story.
August 29th, 2014: Cobin describes, in his own words, what actually took place between himself, Berwick and Johnson in September, 2012. “Jeff Berwick is as guilty as Ken Johnson with respect to scamming us. He made the agreement as much as Ken did. He is not a righteous victim despite what Wendy wants to say about him. He has had plenty of time to come clean with Eyzaguirre y Cobin SA and has not done so. Those that trust in Jeff Berwick will be making the same mistake and throw their money away once again. He made an agreement and and has not stuck with it. He has paid us NOTHING. He would now like to distance himself from KJ. Good choice but that fact does not change what he agreed with us. He scammed us. We set up a company with his team. He went around our backs and purchased the property with another company. Then he did not know how to deal with the local authorities or water rights and screwed it up. We would have handled all of those issues. That was our part of the business. They had no intention of including us. Jeff and Ken are scammers, plain and simple.”
September 1st, 2014: Ken Johnson “weighs in” on Facebook.
September 5th, 2014: Berwick’s apology and full on-air acknowledgment to Cobin of their primary business deal, contract and power of attorney’s assigned to Cobin by both Berwick and Johnson, on the Red Hot Chile Radio show of the same date.
September 6th, 2014: Freedom Feens interview with Jeff Berwick.
September 12th, 2014: John Cobin and Jeff Berwick discuss how to move forward in Chile.
September 28th, 2014: The latest from Wendy in a follow-up interview with The Daily Bell.
October 23, 2014: GGC Rescue team takes control over the property. This “Raid” is described, in detail, on page 42 of this document.
Galt’s Gulch Chile Website
Galt’s Gulch Chile on Facebook
Latest Update from the GGC Rescue Team
Freedom Orchard’s Website
Freedom Orchard on Facebook
Atlas Mugged: How a Libertarian Paradise in Chile Fell Apart – by Harry Cheadle
Berwick’s Penance
The Promise of a Liberal Paradise that Resulted in a Fiasco
Gringo De Lepe Sale a Encarar a Su Compatriota John Cobin y Anuncia Acciones Legales
Galt’s Gulch Chile Rehab and The Exposing of Ken Johnson
Gringo Cobin Califica De “Mentiroso” Y Sinvergüenza A Gringos De Galt’s Gulch Chile
Ken Johnson answers questions about Wind Turbines
Jeff Berwick’s “Penance” on August 30th, 2014
Jeff Berwick’s “Redeeming Galt” Reports on the Efforts of the GGC Rescue Team
By Terence Gillespie September 11, 2014
The most useful things built on land are built last. I propose reversing that order. Build it backwards. Small structures provide big comfort and improvements relative to their size and cost. Their return on investment is high because the investment is small and the return is relative to the “nothing” of vacant land.
Building backwards and small enables you to get the most important uses out of your land first, and soon. There are many advantages other than a high ROI. One might be to rescue this widely held and rarely realized dream from the never-to-be-crossed-out section of your bucket list.
We’ve started the project of securing a retreat in the country and there’s been a world of decisions in choosing one plot of ground. That part of the journey is ongoing and best left to a separate article. Between scouting trips thoughts have turned to solidifying the vision. As the vision became clear I started thinking about ways to Optimize the effort-to-value ratio of building any house in the country. We’ll be building across state lines so remote access factors come into play in our optimization approach, as well.
Plan the Site – Then Build Small and Useful
You have to plan the site anyway, right? Planning is an expense that enables every downstream cost (Including time) to be optimized.
Plan everything your dreaming of for the site. Make sure it fits with the natural flow of the topography. Be practical and figure what you want and what you don’t. Consider everything including the next owner and future generations. And when you’re done pick the smallest most useful element from your plans and build it first.
If you don’t have road access or need an easement then you’ve got some road or legal work to do. Depending on your site design, however, it’s possible your first small structure is some distance from the main building site. If that’s the case then you’ll only need road access to the first structure. Working on that, and leaving the larger road work project aside, for now, still fits the general idea of building it backwards.
Universal Site Plan
If you plan well your plan will capture the universal truths of the lay of the land. Future owner preferences will vary though none would benefit from going against the natural flow of the land.
If circumstances change before you actually build out your vision then most of the things you’ve already built have a good chance of fitting in with the next owners vision. Though not more important than your own values and goals there’s good reason to believe that well-built structures in-line with the natural flow of the land will become permanent beyond you.
My working definition of useful is anything that provides shelter, storage, rent, access or produces income or savings. Ideally, it’s something you would have gotten around to building anyway and decided to build first rather than last.
Covering every possibility is impossible. There’s a continuous line of structures from a tent to the Taj Mahal. Here’s a trigger list to get your creative juices flowing:
Lean-to & Firepit
A Finished Shed (House?)
Trapper Cabin #1
Trapper Cabin #2
Pole Barn with RV Stored Inside
Pole Barn with RV Parked Beside
RV pad/hookup
Tiny House on Ground
Guest Cabins & Cottages
The popular descriptions of structures bleed into each other. At what point does a shed become a garage? When you use it as one. What’s the difference between a shed and a Gable? Roof design and quality. The difference between a cabin and a cottage? Depends on who you’re talking to about the property.
We’re securing a retreat in the country where we’ll build a downsized semi-off-grid version of the house we currently live in. We live in a 3200 sq. foot home and could easily chop off 1000 sq. feet as long as there is storage and room for guests.
We have a clear vision of the design and function of our future home in the country. We are also in the advanced stages of choosing the exact location. Once we’ve decided and bought the land there’s some big decisions to make. Made badly, or not at all, and the whole project could grind to a halt.
Build or Sell?
If our vision is clear why not find an existing place that fits and buy it?
No debt. Purchasing the land and building slowly is a form of self-financing that keeps us from having to take a loan.
Flexibility. As circumstances change and money comes and goes we can make optimal choices on the margin about the timing, cost and usefulness of the next step.
Working harder now to build a second house will enable us to rent our current house in the future for retirement income.
Doing so would require selling our current home and moving immediately. In addition to disrupting my wife’s job we prefer to hold onto our current house for backup.
I like to build things and would prefer designing and building exactly what we want (Where we want it).
The last thing we need is land we don’t use. Our best use for land would be to provide:
Overnight Stays – Comfortable enough so they’ll actually happen.
Storage – For Tools and Supplies.
Income – Rental or from our direct use.
Security – For our retreat and securing the property in our absence.
These are the functions we’ll keep foremost in mind when deciding what to build first. The sooner a stucture provides one of these functions the better. Chosen wisely we could fulfill all these needs with minimal cost and effort and spread more ambitious plans over time.
We could stay in a motel, hotel, apartment, rental cottage, cabin or at a friend’s house. There’s nothing like the occasional motel room to freshen up. However, we’d prefer to put money directly into improvements wherever possible.
Tent & Rental Car
Realistically, it will be yours truly driving a rental car, setting up a tent and enjoying some getaway camping, at first. This zero structure lo-fi method is a custom fit for me (Supplemented with an occasional motel room). Some of the best adventures I’ve been on were done car camping with a tent. I can’t think of a better way to stay overnight while jumpstarting our place in the country.
Lean-to or Shed
Depending on the land the first structure will be either a Lean-to and Firepit or a custom shed. Either will provide extra shelter and comfort for future solo trips. The Lean-to would become an outdoor gathering place when we’re living on the land, permanently. The shed would be a great place to store supplies and tools and also be a notch above a tent for shelter. Done well, either one will give a sense of accomplishment and start momentum towards the next improvement.
While building the first structure I’ll collapse the tent and check-in to a motel room to recuperate, now and then. Our location shouldn’t be more than 30-40 miles away from one. I’ll keep tools in the truck and haul supplies as needed. My SUV has been a champ playing this role on local builds. Though it hasn’t been necessary I could always rent a local U-haul for a day to haul large materials.
My wife will go two nights in a tent or lean-to. Longer than that and it’s time for a motel room. If we ever hope to stay on the land, together, for longer than a week then we’re talking mobile home or RV. Happily, mobile homes and RV trailers can be bought for a song, nowadays.
If we go with the mobile I’ll prepare the site and have it delivered. If we go with an RV I’ll pull it on-site with the truck. Either one is a big step up from, and will supplement, the lean-to or shed.
This is a big step. If I can make overnight stays a pleasant experience it would get my family on-site more often and provide support for the next build. That would pave the way for making progress on the rest of the project. If our project gets stopped we still have land, a shed for on-site storage and a comfortable means for overnight stays. Add the rental of a small public storage unit and we’d have a Bug Out Location, already.
There will have been significant expenses, at this point. However, in relation to their value it smacks of Optimal bang for the buck.
Notice all of the above options leave nothing wasted though we’ll be implementing only four of them depending on the site:
The rental car gets returned.
Use or sell the tent at a garage sale.
The lean-to and firepit become an outdoor family gathering place for BBQ’s.
Everyone needs a shed and a good one, at that.
The RV can accommodate guests or be taken on your next vacation.
The mobile home can become a guesthouse, sold or moved.
Everybody needs a place to put things. Building requires tools and supplies and so do humans. Kick back on a hammock all week and your food and water is still better off out of the heat of the rental car. The questions are should the storage be:
Secured by something/someone other than you?
I find underground storage options to be more romantic than practical. It’s expensive to build reliable underground structures and the drop-ins are no picnic with their delivery charge and crane installation. Completely concealing underground storage is hard unless it’s kept small and dispersed.
Until I have someone on the property full time my answer to off-site storage is yes. More specifically, we’ll supplement our on-site shed with a public storage unit. When we’re off site everything we can’t afford to lose goes into a public storage unit. That’s only $35/mo where we’re looking; cheap insurance for expensive tools.
A side benefit of renting public storage is it gives you a local ship-to address while you’re remote. Ask a friend (Or the on-site storage folks?) to receive the shipment and put the materials into storage for you. When you come into town stop by and pick up what you need to get started.
Gotta Love These Pole Barns
A larger pole barn is a possible one-building solution to overnight stays, storage and a little bit of security for the trouble. There are options to insulate them if it fits your long term goals for the structure. In fact, a pole barn that fits the site is so useful my first title for this article was, “Build the Barn First!”. However, building backwards is a more complete way to say it and opens up more possibilities.
If it fits the site plan we may skip the shed and go right for a larger pole barn. If so it would make sense to consider one big enough to house an RV. In the event we decide to buy an RV for overnight stays the barn would provide a bit more security and protection for it.
Even if the pole barn was not insulated it would become a second option for sleeping bags over a presumably more comfy RV. Also, if there are ways to secure it well enough, or, we discover that theft is a non-issue then we might risk storing an RV and more expensive supplies there. Such choices can only be made on the margin as things unfold.
Nothing is 100% secure if you’re not living there. Second best is a house sitting friend or renter. Third best is line of sight view and regular stop-by’s from a neighbor. When you’re off site store anything you can’t afford to lose in public storage.
Put a Web Cam on it?
You’ll need electricity, satellite-only internet and a dedicated (Cheap) computer for this option. For the trouble you’ll get four to eight cameras monitoring your site. It’s not foolproof but it could make your eyes the first eyes to see anything suspicious. Call your neighbor and ask them to check it out.
With all the excitement of working on your house in the country don’t forget it gives your family the added benefit of a retreat location should you ever need to leave your current home. Every improvement makes it that much more comfortable for you family in times of retreat. One need only browse recent headlines to become a fan of having some geographical diversity in your housing plan.
What if you could build something that would provide a source of income?
If a moblie home were in the right location and had electricity and water then it could possibly be rented out. Nowadays that may require having cable and internet installed, as well.
A second possibility is to stay in your mobile home or RV while building a Tiny House on Ground or a Small Guest Cottage. Once built you’d no longer have an issue providing a comfortable place to stay for your family. Depending on location you might even be able to rent it out to someone who could keep an eye on the place for you between builds.
If you can rent out a mobile home or cottage then why not have two (Or one of each)? One for a renter and the other for you.
Building two enables leveraging of design, materials, labor and knowledge into a second identical structure. Rent one and stay in the other. If one isn’t rented then all the more options for family and guests. Even if you build one tiny house or cottage and don’t rent it you could then get rid of the RV or supplement the cottage with the RV.
Either way it will be much easier to get your family to stay longer!
Speaking of Building it Backwards the smallest and last provision for electricity will be the first one on the back of my truck: A generator.
Bringing electricity to rural land is expensive. Even if your land already has an electrical drop the expense was built-in to your purchase price meaning you would have been able to purchase more land if it wasn’t. Whether you value more land or less with electricity is up to you. I’m a bit torn on the issue and will face it as we zero-in on our exact land choice.
My overall opinion is that electricity is the easiest utility to do without or provide by self-sufficient means. Since our goal is to provide at least some of the latter I’m not sure how much I’m willing to pay for the former.
Water is life and mandatory. It’s so crucial to rural land it makes for a go/no-go buying decision. If you’re lucky enough to have a stream running through your land then you have a huge jumpstart! You’ll still have to setup pumps, plumbing lines, sewer and leach field, but, drinking water is only a two-stage gravity filter away.
Everyone else has to either drill a well and hope for the best or haul water in. If drilling a well is mandatory it’s too big a risk to not have an idea of whether you’ll be successful or how much money to set aside for the expense.
Will you have to drive to get a signal on your cell phone? That could be a time and money losing proposition. Satellite has too much latency for any VOIP functionality you may be counting on. Best check on this, in advance.
Structure order is only part of build strategy. You may know what to build and still get stuck on strategy. Since we’re building remotely I’ve been thinking through the various options. Here’s some thoughts off the cuff in the spirit of sparking a jumpstart or an idea to break the logjam of the theoretical.
As discussed previously, unless your paying someone else to build you’re going to need tools, supplies, a place to store them and a place to stay while you’re building. While large industrial one-use tools are best rented general tools and equipment are best owned for long term use.
Store all tools and supplies underground on-site.
Store all tools and supplies in an on-site Shed.
Build an on-site shed supplemented with small public storage rental.
Keep RV onsite or in local public storage and pick it up when visiting property.
Rent and return a separate RV trailer for each building session.
Keep RV on a friends property and pick it up when visiting property.
Build a pole barn on-site large enough for supplies, tools and to store RV inside.
Put a wood stove in the Pole Barn (Properly vented and with CO2 detectors all around) to heat.
We live a considerable distance away from our potential building site. That means any RV must be stored or rented locally even if we own it. I’ll be driving the truck to the site and it’s not worth the extra gas to haul an RV back and forth. The gas savings alone would pay for the RV or its local rental.
The more clear and definite your vision the less time you’ll waste. The best use of your time is spent building structures that fit into your overall site plan. You would have built them anyway and just decided to build them first because of their superior marginal utility.
If you’re stuck on what to build first then there are three ways to go.
Build the Smaller Thing
Let’s face it, building something useful that you would be proud to have on your land is always a bit more difficult than you first imagine. Maybe what you have in mind is too ambitious. Take it down a notch or two. Instead of building a pole barn build a shed. Instead of a shed build a metal canopy. Instead of a canopy a Bear Grylles lean-to to take the edge off the wind for overnight camping.
If you know a larger pole barn will obviate the need for a shed, smaller barn or serve as a workshop (And maybe even store an RV) and you have the means then the optimal use of your time is to build it first. Such a barn is a considerable project though much less than a home. The useful structures you build before your home may still, in themselves, be considerable projects. But, they still bestow the benefits of building it backwards.
Temporary Stuctures
Anyone who’s hauled a port-a-potty or scaffolding onto a building site knows that temporary structures can be the Optimal next choice. If a temporary structure has that much use, and you’ve got the money and time, then build it.
Build It Backwards Advantages
The idea of building it backwards can be implemented in an infinite number of ways. Limiting the focus to my family’s personal goals the approach has the following advantages over a more traditional strategy:
Gets you thinking of ways to use of your land, immediately.
Gets your land ‘producing’ at the beginning of the building process rather than at the end.
No debt. Purchasing the land and building slowly is a form of self-financing that keeps you from having to take a loan.
Flexibility. As circumstances change and money comes and goes you can make optimal choices on the margin about the timing, cost and usefulness of the next step.
Working harder now to build a second house will enables renting your current house in the future for retirement income.
You get to design and build exactly what you want, where you want it, and when you’re ready to build it.
Motivates site planning from the beginning which saves time, money and effort.
Provides a place to live on your property whenever you decide to be there.
Provides a place to live while working on or building the next phase of your country home.
May provide a place to rent for income or on-site security.
Starts momentum. Once you’ve built something useful the chances of adding further improvements rises exponentially.
Your improvements to the property for tax purposes will be minimal. By the time it amounts to something you’ll be getting maximum value from the land.
The most useful things built on land are built last. Reverse that convention and build it backwards. Small structures provide big comfort and improvements relative to their size and cost. Return on investment is high because investment is small and return is relative to the nothing of the vacant land your starting with.
Get the most important uses out of your land first, and soon. Doing so may rescue this widely held and rarely realized dream from the never-to-be-crossed-out section of your bucket list.
By Terence Gillespie August 27, 2014
About 1/1000th of the earth’s water is in the atmosphere. All you need is a dehumidifier to get it out. But, you can do better than that.
An AWG cools the air below the dew point which causes air to give up its water. It then runs it through a filtration system before pumping it into your glass. The water is delicious.
The rate of water produced depends on relative humidity and air temperature. Our machine struggles with anything below 35% humidity. At 65 degrees it works very well. We’ve never tested it below 65.
We have two AWGs. The one upstairs quenches our midnight thirst without tripping down stairs to the kitchen. It looks like a water cooler and blends in to the furniture on the landing.
We haven’t used the downstairs unit much because we have a 3-stage water filtration unit under the sink. I could always use it for spare parts in an emergency if one of the machines breaks down.
The machines are easy to maintain, but, you have to understand them and how to clean them out once in a while.
We change the filters every six months and the water tastes delicious. We did have a problem with one machine because the grate in the nozzle dispenser was not installed right at the factory. That eventually blocked the water from coming out. Unfortunately, I didn’t take the time to fix the problem, immediately. I did the worse thing you can do with one of these units: Shut it off and let it sit.
I recommend not shutting these units off and letting them sit. It creates standing water in various stages of the machine. To clean it out you have to run hydrogen peroxide through it a few times and change all the filters.
I recommend having a backup generator to run the units in an emergency. To be a true emergency backup water supply you’ll need to be able to power the unit if the grid goes down. The operating power for ours is listed at 500 Watts. Even a small generator will leave you with power to spare to run a refrigerator and TV.
Turn the hot water heating element off to save electricity. It’s listed as using another 500 Watts which is as much as the main unit.