Many may recall the libertarian-fashioned community being planned in Chile called “Galt’s Gulch Chile” (GGC). If you’ve been reading here at TDV for years, you know that I had very high hopes for it and was the largest cheerleader of the project as I thought I was a partner in it and had 50% control of the project (I later found out I didn’t due to numerous nefarious, fraudulent acts that weren’t uncovered until well after the fact – in fact it has taken the last year to even figure out how it was pulled off).
What most don’t know is the sordid story of how so many investors in the project were wiped out, with one even now living in his car with his family… and the one person who put $0 into the project and masterminded the scam is hunkered down with weapons and living on the property that others bought!
It is an insane story that may finally be close to having a just outcome after years of battle.
The stories are enough to fill a book.
Cathy Cuthbert, a leading member of the GGC Recovery Team of investors and buyers into the project had this to say, “Not a week goes by that I don’t hear from at least one GGC investor or former employee who had his savings wiped out and his life totally disrupted by the mastermind and conman of GGC, Ken Johnson. I’ve worked essentially full-time for over a year on GGC, and it’s for those people that I’ve done it.”
So far it has been a true tragedy of injustice… until this week.
Finally, after more than a year of sifting through all the sordid details of incompetence, chicanery, lies, deceit and fraud, criminal charges have been filed in Chile against those involved.
- Palomba et al v. Kenneth Dale Johnson, Mario Del Real, Pamela Del Real, Alexander Del Real. Juzgado Garantia de Curacaví docket number: RUC 1510039752-5. This first case is for fraud and a violation of the Urbanism and Construction Act, the sale of a non-existent real estate development. Twenty-two investors have filed this charge against Johnson and the Del Real family.
- Kirley v. Johnson. 4° Juzgado Garantia de Santiago docket number: RUC 1510039858-0. The second case is for a second violation of the Urbanism and Construction Act, selling residential lots in an unzoned real estate development without obtaining a bond or insurance to protect the investor.
Each violation of the Urbanism and Construction Act is punishable by up to 10 years in prison. With a felony conviction, Johnson would be deported to the United States after his Chilean prison time, where no doubt several federal and state government agencies will welcome him.
- Kirley v. Ramirez and Pamela Del Real. 7° Juzgado Garantia de Santiago docket number: RUC 1510039686-3. The third case is for contempt of court. GGC investor Josh Kirley was granted an injunction against any sale or agreement concerning GGC land and associated water rights. Guillermo Ramirez, the Chilean who sold the farm property to GGC, and GGC General Manager Pamela Del Real made an agreement about the water rights on the farm property, a clear violation of Kirley’s injunction.
Contempt of court is punishable by up to five years in prison.
Here are the mugshots of the four main characters being charged:
“These three cases are a significant step in recovering our investment and obtaining justice,” said Tom Baker, GGC investor and member of The GGC Recovery Team. “They are only part of a wider case. We expect to bring more charges in the future.”
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.
“We tried to negotiate with Johnson for his exit from the project for well over 18 months,” reports Baker. “He just wouldn’t budge. Most of us don’t want to go the criminal court route, but we were left with no choice. To let Johnson, Del Real and company get away with this fraud would expose other victims in the future.”
A 130 page forensic report detailing Ken Johnson’s activities with GGC has also been submitted to the FBI in the US where he is expected to be deported upon conviction in Chile.
WHAT HAPPENED TO THOSE WHO BOUGHT OR INVESTED IN GGC?
As mentioned above, one of the main themes of those who have mocked the GGC investors has been that they are “rich” libertarians and therefore, by those who dislike or are jealous of those with wealth, don’t deserve any pity.
The reality is that numerous lives have been destroyed by the actions of Ken Johnson and the others charged. While it is hard to calculate my losses, as some of it was in lost time over the last three years dealing with the problems, it is well into the six digits and quite easily in the 7 digits. But, I now solely work to recover the project for the buyers and investors.
But, the most noteworthy, of a long list, is an initial investor into GGC who prefers to remain anonymous. This investor believed so deeply in GGC that he sunk his whole life savings into an equity investment. He currently supports his wife, their toddler and infant by doing odd jobs like shoveling snow and cutting lawns. They alternate between living on relatives’ couches and sleeping in their car.
Another investor, who was instrumental in contacting other GGC investors and beginning the recovery process, passed away last September, well before seeing her dream of a libertarian community coming to fruition. Her husband told us that the stress of dealing with GGC contributed to her passing.
Then there’s the Phillips family, who are anything but wealthy. They used the proceeds from an insurance settlement to buy into the GGC farm program, hoping for some extra income from the dividends. Needless to say, they are still waiting.
DETAILS OF THE ENTIRE, SORDID GGC MESS
The investors and buyers at GGC have banded together to form what they call a GGC Recovery team headed up by Tom Baker. They have compiled a laundry list of bizarre, insane stories and information on the entire affair at http://ggcrecovery.com. It’s worth checking out for the humor alone as they try to put a horrible situation into the lightest context possible… and given how ridiculous the entire affair has been it is easy to put it in a comedic light… even despite how many have suffered to date.
To show how crazy it has been, here is just a very short list of some of the unbelievable things Johnson did at GGC aside from selling land to people and then not giving it to them:
- Kept indentured servants. Did you think that indentured servitude was extinct in our modern world? You would be wrong, as Johnson practiced his own version at GGC. When the Recovery Team took over the farm, they found that two 23-year-olds were living in squalor there, without money due to not having been paid by Johnson, and without transportation. Johnson would show up from time-to-time to bring them food.
- Gambled with GGC money at Viña Del Mar casinos. Libertarian songstress Tatiana Moroz exposed this habit, but she’s not the only one who told the GGC Recovery Team that Johnson took our money to the gambling tables. Two other employees witnessed it.
- Dug two illegal wells. The farm manager was able to convince Johnson that the farm needed at least one deep well to have enough water for irrigation through the summer. Johnson put an inexperienced man in charge of the project. Instead of digging a deep well, the guy had two shallow wells drilled. Great. Two more shallow wells to add to the 53 others on the property. And they did not follow the regulations for opening a new well, so the wells were declared illegal by the Chilean Water authorities.
- Cut down environmentally protected trees. Just after the second real estate closing, Johnson had a marketing event at the farm. To impress potential investors, he rented a couple of backhoes to grade a road up in the hills. In the process of grading, several protected trees were cut down. What did the tree hugging Johnson do? He had the workers bury the stumps to hide the evidence, of course.
- Fed salmon to his dog with GGC money while employees went unpaid. Johnson used to buy salmon and cook it for his dog. He bought a five-foot chest freezer to store the salmon, paid for from GGC funds. At the same time, dog lover Johnson wouldn’t feed a litter of five puppies abandoned on the farm. Two of them starved to death.
But, besides all that and literally dozens of other sordid/bizarre stories, the biggest injustice is that 70+ buyers and investors put more than $10 million into GGC to build a new life in Chile and Ken Johnson, who put in $0 and pilfered and/or wasted millions of their money is the only person currently living on the property!
We contacted Tom Baker to ask him about progress in getting the land back that investors and buyers purchased. Here is what he had to say:
Our progress may not have been quick, but it’s been steady. When we started, we didn’t have an investor list. We didn’t even know how much money Johnson had taken in. Bit by bit, we were able to piece together exactly what happened.
This was a classic affinity fraud. Johnson sought out libertarian celebrities to use them to get us to open our wallets. He got libertarians to join the GGC sales team. He talked about wanting to do business on a handshake basis, as many libertarians do. He even signed his emails with “to your freedoms.”
Once we all understood that GGC was an affinity fraud, and we joined forces, we made fantastic progress. It will take time, and it will be expensive, but we have to pursue criminal charges to reboot the project and prevent Johnson and his accomplices from preying on anyone else.
Our evidence is solid. The law is clear. We’ve got great lawyers. We’ll prevail.
THE FUTURE OF GGC
GGC has been a nightmare for all involved, including myself. A year ago I wrote of my deep depression and even suicidal thoughts as it began to become clear that we had all been hoodwinked.
It has taken more than a year’s work by numerous investors and buyers to untangle the unbelievable web that Ken Johnson had spun and has cost a lot of money that a lot of people didn’t have to pay lawyers to figure out exactly what had been done to them.
Chile has an opportunity to show foreign investors that they have some ability to guard against fraud through their legal system. Numerous criminal and civil cases in progress now, which lawyers expect will all succeed, could and should result in the investors and buyers recovering the land they paid for.
When that happens GGC could actually go on to be a rousing success. The land is some of the most beautiful and well-positioned land in all of the world (that’s why the project attracted so many buyers and investors) and if this entire mess can be unraveled in the courts we may finally, after many years of struggle, be able to say GGC is a success.
Some of the buyers/investors and their families will finally be able to move onto the land currently being occupied by the very person who stole it from them.
Ayn Rand could never have imagined just how a development based on her fictional novel could have become an even more sordid and unbelievable tale than the book itself… so far it has.
But it isn’t over yet.
[You can read more about it at and keep up-to-date on events at GGCRecovery.com and also check out this article by buyer and GGC Recovery team-member, Cathy Cuthbert, “Caught in a Fraud? Blame the Fed”]