NOTE: Version 1 of this book is ready as of June 11th, 2015.
I’ve put all the articles of the McGillespie.com GGC series into book format and am supplementing it with the latest developments and documents from the recovery efforts. In addition to all the articles of the series the book contains:
An Index and description of all people involved, or referenced, in the GGC story.
QR Codes for videos, websites, media articles, etc.
Links to ALL publicly available articles and documents related to GGC.
A Chapter describing the types of fraud that were conducted around GGC.
A Chapter describing the five types of contracts that were used with investors and buyers of GGC “Products”.
A Chapter describing the Rio Colorado/GGC Share swap.
A comparison table of the eye-witnessed actions of Kenneth Johnson to Dr. Robert Hare’s Psychopathy Checklist (PCL-R).
Copies of all legal actions or criminal charges filed with regard to Galt’s Gulch Chile.
The original “Founders Club” document Cobin wrote, and Johnson later modified, and sent out to all investors who expressed interest in GGC.
The original Business Plan that got things started.
Download links for all PDF files related to GGC that are too large to be included in the book.
The book will be updated with all the latest developments around GGC including legal actions, criminal complaints, media articles, youtube videos, articles by Terence, and any significant releases from the recovery team.
This is not a traditional book but a working document meant to help the people involved and inform (And entertain!) the public. It’s currently 200 pages, and growing. I may add an index but the e-book format already enables the reader to search for their term of interest, quite easily. It’s currently in PDF format but I could convert it to EPUB and .MOBI if there’s enough interest. Please send me an e-mail if you would appreciate that potential effort.
The purpose of the Book
To Document, on an ongoing basis, what is happening with Galt’s Gulch Chile to assist recovery efforts, underway.
To be a trusted and reliable source for journalists and media outlets who may wish to write about various aspects of GGC.
To tell the truth about GGC while the facts are clearly in the memory of the participants and the evidence is freshly available.
To document the crimes of Kenneth Dale Johnson and others so possible future victims may be warned.
To Document GGC for legacy reference and lessons that may be gleaned for both GGC restoration and other such ambitious liberty-minded projects.
How to Get Your Copy
Version 1 is ready as of June 11th, 2015. If there’s an update I’ll post the version and date, here, on the page you’re reading.
Go to McGillespie.Com, type your name and e-mail into the boxes under “McGillespie Resource Library”, then hit the submit button. An e-mail will be sent with the password to the McGillespie Resource Library which contains the book and many other resources you might find useful.
For future updates (Or any problems downloading the book) use the “Contact Us” tab or leave a comment, below, on this page with your name and e-mail.
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
Procedimiento:
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.
Thank you,
Terence GIllespie
McGillespie.com
Jerry’s Response
Hi Terence:
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.
Jerry
Inference & Analysis
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.
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.
Thursday, April 23rd:
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?
“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 facts are these:
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.
No Honor Among Thieves
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!
Johnson’s Law
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.
Water Rights?
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.
Farm Status
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.
Litigation Pending
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.
Short-term Predictions
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.
All the land development talk in my Galt’s Gulch Chile series seems pretentious. Then again, merely telling the average person you’re flying to Chile has a good chance of causing eyes to glaze over as if one is doing something exotic. Flying to Chile is not exotic; it’s merely something that’s possible the instant one decides it is.
If there’s a storm headed your way it’s time to cut the crap-talk about some castle you own and get to a motel room anywhere the storm isn’t. Why be grandiose about the simple and elegant act of leaving to let the storm pass? In fact, why say anything at all except to make a few calls to shutoff utilities and keep any promises you’ve made to others before leaving town? With mouth firmly closed, just hop a flight and get a room.
Engaged Withdrawal is Not Passive
The point of all this ex-pat business is to contribute to the solution through engaged withdrawal. Having gone through much of the advanced work of ex-patting my family I can vouch for the truth that engaged withdrawal is not a passive undertaking (Hat tip to Wendy McElroy for this link).
Two Paragraph Expat Guide to Chile
Forget about all this talk of land development and ownership. Motels, Hotels, Apartments, houses and cabana’s dot the entire country, have already been developed, and are yours for the renting. Your best second home is a rental anywhere you want to be. Keep it that simple and you won’t even be limited to Chile.
Nine out of ten Chilean ex-pats end up in NE Santiago (Las Condes) so just rent there for a few months and make scouting trips on the weekends. When the 90 days is up on your visa fly to Argentina for the weekend and reset it. That’ll get you out of the US for six months with your “measly” first passport. You have one, right?
It’s Your World, Boss
The world is yours the instant you recognize it is. The nagging urge to “own” things, perhaps stronger in the American psyche, is best kept at bay when conducting one’s life across multiple nation-states.
I recall streaming the movie “Inglourious Basterds” [sic, indeed] from netflix to the ipad and realizing the adjoining cabana could be rented for my kids, along with the one we were in, for less than our US mortgage. With that thought, the fear of being trapped in proximity to the endless artificial problems of the state’s creation started to melt away. My second thought was that all this was achieved for the price of a plane ticket, rental car and a hotel room.
“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.”
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”.
“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?
“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:
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.
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.
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.
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“.
Contracts are Good for Libertarians, Too
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.
Slow is Fast
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.
Rules Without a Ruler
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
Bitcoin & Alternative Currencies
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.
Perfection?
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 beforestatists/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.
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.
Root Cause
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.
Not Guilty by Association
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.
What Do I Care?
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.
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.”
When …
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.
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.
