Galt's Gulch, Chile
|How the sausage is made|
“”Almost all of the buyers and investors into GGC – 73 families paid in over $10 million – are libertarian and as such they have been attacked publicly as rich, greedy misanthropes who were so hopelessly naive as to think they were escaping the government by moving to Chile. Being libertarians, many of GGC’s investors were against the use of government courts to correct the injustices and receive the property they paid for. But what they found was that there simply was no other way to regain their stolen property without doing so.
|—-Jeff Berwick, realizing why government exists for the first time|
Galt's Gulch, Chile was a libertarian paradise and completely obvious catastrophe conceived by John Cobin, Germán Eyzaguirre, Jeff Berwick, and Ken Johnson. GGC claimed to feature 11,000 acres of land located in picturesque valleys full of fresh air in a low-tax country, where Randians who believed in capitalism, limited government, and self-reliance would be able to form a sustainable community that expressed their ideals. (Spoiler: It went to shit.)
Soon after the first parcel of land was placed under agreement, conman Ken Johnson was able to defraud his partners of their share of the project and take complete control. He did not work to develop the properties for a community, but instead worked an affinity scam. Johnson used Berwick and other libertarian "celebrities" to dupe his victims. He even offered discounts for those who paid in Bitcoin or precious metals as part of the confidence scheme.
Johnson started selling properties in late 2013 and early 2014 until a marketing event in April 2014, where it was found that the properties had never been zoned for sale (e.g., no approved master plan, water rights not transferred to GGC). Also, there were a number of outstanding bills to contractors that had not been paid (and who refused to perform further work). After seeing Johnson's presentation, a number of the original investors who attended the event lost faith in the project and requested their money back. According to his investors and his erstwhile partners, Johnson never did his due diligence before buying the properties. His defense of the dismal situation was to rant about unknown enemies of the project all around.
Just prior to the April 2014 marketing event, the GGC bank account had been blocked to receiving international wires due to Johnson's violations of the know-your-customer regulation in Chile. He was approached by Chilean swindler Mario Del Real who convinced Johnson that the GGC corporations were not legally structured and that Johnson should partner with Del Real to rectify the situation. Del Real also offered his daughter's bank account for GGC's use. Inexplicably, Johnson agreed to this obvious scam and ultimately transferred half ownership of GGC to Del Real. This began a finger-pointing soap opera between the swindling partners which has stuck the project in limbo and the Chilean courts.
In November 2014, a small group of investors traveled to the GGC farm to discuss Johnson's exit from the project. Johnson, realizing the jig was up and afraid of the investors, refused to meet with them. Instead he hid in the bushes on the farm and eventually made his way to a worker's house and was driven from there to a friend's house in the nearby town of Curacurví to hide. Johnson continues to insist that the investors "invaded" the property despite all the eye witnesses stating otherwise. Johnson then fled Chile for about six months, returning in the spring of 2015 with armed thugs to take back the farm from the investors. His purpose in returning was to build a case that he was genuine in his stated goal of building a residential community on the GGC properties, since this would be his only defense in court. Johnson then joined the Workaway.info website and began receiving dozens of first world backpackers who traded labor for free room and board, a situation that violated Chilean laws. The GGC Recovery Team contacted Workaway.info and informed them that they were aiding an affinity scam and requested that they remove him from their website, but ultimately they refused.
In late December 2016, after Johnson had left Chile to avoid a hearing in the Chilean criminal court, Del Real upped Johnson by sending approximately 20 thugs to take over the GGC farm.
From information in the legal documents, Del Real remains in possession of the properties as of this writing (Apr 2018). The company holds the title to two parcels. One is a farm with what was a working lemon orchard, but GGC doesn't own the water rights. Johnson paid approximately US$7 million for the GGC real estate. The remaining US$3.4 million of investor money was squandered and stolen by Johnson and Del Real.
GGC Recovery Team and legal proceedings
The Investors started a group called the GGC Recovery Team in October 2014 when they realized they were defrauded. They instituted a legal fund that is paying for civil and criminal litigation against Johnson and the Del Real family with the goal of recovering as much of the $10.4 million as possible. In May of 2016, they won an arbitration for $1.3 million, although Del Real was able to delay the final decision by endless delay tactics in the courts. The arbitration decision was made final and a small dollar award was paid to the GGC Legal Fund as a result in August 2017. The process to collect the balance of the award was begun soon afterwards and will likely last through the end of 2018 when the GGC properties will be auctioned.
On Feb 22 2018, the criminal court of Curacaví made the criminal investigation against Mario Del Real official. On April 10 2018, Pamela Del Real, Mario Del Real's daughter, also came under official investigation. Johnson did not appear and apparently fled Chile in December 2016. An arrest warrant was issued for him for his repeated failure to appear in court.
The official stage of the prosecutor's investigation will last approximately six months and may culminate in indictments.
- For a more complete telling of the GGC story--there are many more twists and turns--see the GGC Recovery website and especially the time line that includes links to all the legal documents.
- Galt's Gulch Chile
- Whatever Happened to Galts Gulch Chile
- Galt's Gulch Website
- GGCRecovery.com, the website of the GGC Recovery Team
- When Is a Partner not a Partner?
- National Post: Freedom and Liberty not Enough to Save Galt's Gulch
- Patheos — Galt's Gulch Chile Is Going Great
- Rio Colorado: The Con Man Got Conned
- Letter:All You Need to Know about the Demise of Galt’s Gulch Chile
- Latest Galts Gulch Chile Scam--Free 1st World Labor
- Facebook page of the GGC Recovery Team
- GGC Recovery Main Site
- A Californian economist loves neoliberalism. When Chileans started protesting it, he opened fire on them.