Jeff Berwick and Galt’s Gulch Chile: A Regrettable Summary

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?

“He’s a fantasy writer, nothing more. He writes about the fantasy of being a badass anarcho-capitalist. It took me a while to realize what big crooks they (Berwick and Johnson) were, but they rubbed elbows with so many people I trusted and respected. Hell, now, whenever anyone I listen to or respect interviews Berwick, I feel my gut drop.”

— Former TDV consultant who “Narrowly escaped involvement with GGC”

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:

1. 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).
2. One has the ability to bring capital into a project (Berwick was apparently able to do this for GGC).
3. 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.

Postscript

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“.