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UNITED STATES

Atlas Mugged: How a Libertarian Paradise in Chile

Fell Apart
ByHarryCheadle(/author/harry
cheadle)
SeniorEditor
(/author/harry
cheadle)
(https://twitter.com/hcheadle)
September22,2014

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IllustrationbyOleTillmann

Itwasagoodidea,intheoryanyway.Theplanwastoformasustainablecommunitymadeupof
peoplewhobelievedincapitalism,limitedgovernment,andselfreliance.Thesitewasalreadypicked
out:11,000acresoffertilelandnestledinthevalleysoftheChileanAndes,justanhour'sdriveaway
fromthecapitalofSantiago,totheeast,andthePacificOcean,tothewest.Residentscouldmake
moneygrowingandexportingorganicproducewhileenjoyingChile'slowtaxesandtemperateclimate.
Thiswasnocrackpotschemetoestablishamicronationonaplatformfloatinginthemiddleofthe
ocean(acommonlibertariandream)thiswasaseriousattempttobuildarefugewherefree
marketersandanarchocapitalistscouldholeupandwaitfortheworld'sfiatcurrenciestocollapse.
Theycalledit"Galt'sGulchChile"(GGC),namingitforthefictionalplacewheretheworld'scompetent
capitalistsfleetoinAynRand'sAtlasShrugged.

Theprojectwasconceivedin2012byfourmen:JohnCobin,anAmericanexpatlivinginChilewho
onceranunsuccessfullyforCongressinSouthCarolinaJeffBerwick,theglobetrottingfounderofthe
DollarVigilante,afinancialnewsletterthatpreachesthecomingendofthecurrentmonetarysystem

Cobin'sChileanpartnerandKenJohnson,arovingentrepreneurwhosepreviousinvestmentprojects
includedrealestate,windturbines,and"waterionizers,"pseudoscientificgizmosthatareadvertised
asbeingabletoslowaging.

Continuedbelow.

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Thatinitialgroupquicklyfellapart,thoughtodaytheprincipalsdisagreeonwhy.Now,twoyearsafter
itsfounding,thewouldbeparadiseisensnaredinasetofpersonalconflicts,mainlycenteredon
Johnson.InsteadoflivinginapicturesquevalleysellingGalt'sGulchbrandedjuice,thelibertarian
foundersareaccusingoneanotherofbeingdrunks,liars,andsociopaths.GGC'swouldbeinhabitants
havecalledJohnsona"weirdo,"a"pathologicalliar,""insane,"a"scammer,"andother,similarthings.
Someshareholdersarepursuinglegalactioninanefforttoremovehimfromtheproject,adrastic
measureforantigovernmenttypestotake.Johnson,whoremainsthemanagerofthetrustthat
controlstheland,claimsalltheallegationsagainsthimarefalse.Sowhathappened?

Meet the Team of Galt's Gulch Chile

Meet the Team of Galt's Gulch Chile

(/)

Likemostprospectiveutopias,Galt'sGulchChilestartedoutonapositivenote,atleastafterBerwick
andJohnsonbrokefromCobin.Johnsonwasasavvysalesman,anditturnedoutthatthesomewhat
apocalypticallymindedpeoplewhoreadBerwick'snewsletterwereintenselyinterestedintheprospect
ofaSouthAmericansanctuary.ForthosewhothinkthatWesternnationsareturningintotheworldof
AtlasShruggeddominatedbyparasiticgovernments,hostiletoinnovationandjobcreation,andon
thevergeoftotalitariansocialismGGClookedprettygood.

"WeareveryhappytooffertherespitefromtheWesternworldofoppressivegovernmentstofreedom
mindedpeopleinwhichtheycanbuildanew,moreprosperouscommunity,"Berwickwrote
(http://dollarvigilante.com/blog/2013/5/27/aynrandsvisionofgaltsgulchhasbecomereality
asoftod.html)inMay2013.WendyMcElroy,aCanadianlibertarianfeministactivistandwriterwho
boughtalotonGGC,followedthatupwithherownblogpost
(http://dollarvigilante.com/blog/2013/8/6/findingmywayhome.html)thatsaid,"Itisnowtimefora
libertarianexodusthatwillnottakeyouawayfromyourtruehome,buttowardit."Johnsonwrote
about(http://dollarvigilante.com/blog/2013/9/3/galt%E2%80%99sgulchchile%E2%80%93
wheretheworldiscomingto.html)"sittingunderthestars,inhalingthefreshairandsippingon
someYerbaMate,madewithfreshcleanGalt'sGulchwater."Discountswereofferedtothosewillingto
payinBitcoinorpreciousmetals.

Peopleboughtit,andboughtintoit.InNovember2013,GGChostedacelebrationontheproperty,
bringinginshareholders,andthoseinterestedinbecomingshareholders,toviewthelandandmeet
oneanother.JoshKirley,acommoditiestraderwhowasconsideringmakinganinvestment,was
impressedbythequalityofhispotentialneighbors.

"Thesewerepeoplewhohadmademoneyinoil,hadmademoneyinrealestate.Theywereformer
academics,formermilitary.Theywereverylibertymindedpeople:nonlitigious,hardworking,self
made,intelligent,"hetoldme."ItwasthepeopleImettherethatsoldittome."

AfterpayingattorneysandinvestigatorstoperformabackgroundcheckonJohnsonandmakesure
GGCheldthetitletotheland,KirleyboughtlandintheGulchthatincludeda25acrelemonfarmfor
$200,000,andhegavetheprojectan$800,000interestfreeloan.Hewasn'ttheonlyoneputting
downseriousmoney:InDecember2013theEconomistpublishedamostlypositivewriteup
(http://www.economist.com/blogs/schumpeter/2013/12/libertarianenclaves)ofGGCthatclaimed
Johnsonhadbroughtin$1.5millioninsalesinBitcoinalone.

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Earlierthisyear,however,itbecameapparentthatsomethingwaswrong.InApril,anothereventwas
heldintheGulch,thistime,supposedly,sosomebuyerscouldpickoutthelotswheretheywouldlive.
Thiswasn'tpossible,howeverthelandwasn'tzonedforthe1.25acrelotsthatJohnsonhadsoldto
manyinvestors.Theplanwastorezonetheproperty,butthathadn'thappenedyet.Inaddition,
accordingtoKirley,anumberofhousesthatweresupposedtohavebeenbuiltwereunfinished.

"Youcouldjustsensesomethingwasamiss,"saidKirley.Aquestionandanswersessionforinvestors
gotrescheduled,andwhenhisguestsconfrontedJohnsonabouttheproblemswithGGC,"hejusttold
theseridiculousstoriesaboutalltheseenemiesoftheprojectandhowJeffBerwickwasanenemyof
theproject,whichmadenosense."

TheinvestorstooktotheinternetwiththeirdoubtsaboutJohnsonafewmonthslater.McElroy,the
Canadianactivist,publishedablogpost(http://www.thedailybell.com/editorials/35591/Wendy
McElroyTheFateofGaltsGulchChile/)onAugust25allegingthatGGCowed"immensedebts"to
Chileanvendorsandthatshehadbeensoldalotthatshecouldn'tliveonbecauseofthezoning
issues.Dayslater,Berwickpublishedhisownaccountofevents
(http://dollarvigilante.com/blog/2014/8/27/thegoodthebadandtheuglyongaltsgulch
chile.html)onhiswebsite.

BerwickhadapparentlycometoJohnsonseveraltimesin2013withcomplaintsabouttheprojecthe
wasworriedtheyweresellinglotsbeforeGGChadpaidfortheland,andthatthepropertywasn't
zonedfortheresidentialpropertiesthecompanywashandingout.ButJohnsonconvincedhimthathis
fearswereunfounded,andnoneofthoseconflictsbecamepublic.Berwicksaidtheyhadanotherfight
whenhefoundoutthatJohnsonhadtransferredcontrolofthelandfromacompanythetwoofthem
hadownedjointlyintoatrustthatJohnsoncontrolled.(Theformerpartnersalsohaveanumberof
disagreementsaboutnonGGCrelatedbusiness,andeachcomplainsthattheotherhascheatedhim
invariousways.)

Berwick,Kirley,McElroy,andothersinvolvedwithGGChaveaccusedJohnsonofnotpayinghisstaff
orvendors,ofphysicallyassaultinganemployee,andofnotdeliveringonhispromisestogettheland
rezonedsopeoplecouldliveonit.TheyclaimthatJohnsontraveledaroundwith$250,000ofthe
investors'moneyincash,whichhekeptinabackpackhe'dsometimesleaveinhisjeepthathedrank
inbarsandgambledonroulettewiththeirmoneythathefedhisdogimportedsalmonthathemay
havebeeninvolvedwithscamstosellphonypassportsandthathestillrefusestodisclosethefulllist
ofinvestorsintheproject.Kirleysaysthatheand11othermajorinvestorsareowed,collectively,more
than$4.3million,andthegroupisnowfilinganinjunctioninChileancourtinanefforttowrestcontrol
oftheGulchfromJohnson.Theystillbelieveinthatoriginalvisiontheyjustdon'tthinkitcanwork
unlesstheyreplacethemanatthetop.

(/)

JoshKirleyandKenJohnsoninApril.PhotocourtesyofJoshKirley

ThereareafewproblemsintryingtountanglewhathappenedtoGGC.Oneisthatitappearsthatno
onebesidesJohnsonknowshowmanypeoplehaveboughtlotsontheGulch(hesaysthereare
around50)orhowmuchmoneyhasbeeninvestedintheprojectoverall.Anotherproblemisthat
Johnson'saccountofeventscontradictsthoseofthedisgruntledshareholdersateveryturntohear
himtellit,thepeoplecallinghimnamesarelookingformoneyorfameorseekingtodestroyhim
personally.

LastweekIspoketoJohnson,whostilllivesandworksintheGulch,overthephone.Accordingtohim
thecompanyhas"nineorten"fulltimeemployees,alongwithcontractorsmakingimprovementson
thelandandworkingonthefarm.He'snotmakinganynewsalesatthemomentinfact,hesays,
he'sofferingrefundstodisgruntledinvestors.

InJohnson'sversionofevents,nearlyeveryoneinvolvedwithGGCwasaliarordidn'tdeliveron
promisestheyhadmade."There'vebeensomeinterestingcharacterscomeandgoatGalt'sGulch,"
hetoldmewithachuckle."It'sbeenastrangeproject,tosaytheleast."

Sowhataboutalltheallegationsagainsthim:theunpaidworkersandvendors,themanhe

supposedlyassaulted,andsoon?Johnsontoldmetherearethreeformeremployeeswhoclaim
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they'reowedsomething,buthesaidthatintwoofthecasestheyhadtakencompanypropertyandin
factoweJohnsonmoney.Thereareonly"twoorthreeinvoices"thathaven'tbeenpaid,heinsists.The
guywhosaidJohnsonattackedhimactuallyfelloveraduffelbagwhenthetwoofthem"hadsome
words."

AsforBerwick,Johnsoninsinuatedthathisformerpartnerhasadrinkingproblem,hassufferedfrom
variousrecentbusinessfailures,andasaresulthas"turnedhisangerandparanoiatowardme."He
saidBerwickknewallalongthatthetwoofthemweren't5050partnersinthecompanythatoperates
GGC.Johnsonadded,"It'sbeenalong,repetitivehistoryofJeffmakingalotofthreatsagainstme
andbeingverydefamatorytowardme."

JohnsontoldmehehasbeentryingtogettheGulchrezonedsothatpeoplecanliveonit,butsaid
thattheseeffortswerestymiedbypeoplewhobetrayedhistrust,chiefamongthemAdolfoAguirre,a
ChileanwhowashiredasGGC'senvironmentalplannerin2013andleftthecompanyearlierthisyear.
HesaysAguirrepromisedthathecouldhavethepropertydividedinto450lotsby2014,andthatthey
evensubmittedaproposaltothegovernmentseveralmonthsago,butnothingcameofitbecauseof
Aguirre'slies.JohnsontoldmethathisformeremployeehatesAmericansandwas"actuallyworking
tomakeourapprovalsmoredifficult"healsosaidAguirrewasinvestigatedbypoliceafteraGGC
employeeaccusedhimofstealingdocumentsfromthecompany.

(Byemail,AguirresaidthecaseagainsthimwasthrownoutandthatJohnsonwasa"swindler"anda
"fuckup"whokepthisbuyersinthedarkabouttheproject,habituallyabusedhisemployees,andwas
drivingGGCintothegroundwithhispoormanagement.)

JohnsonclaimshejustwantstheGulchtogetupandrunninghe'shopefulthatoneofseveral
neededrezoningswillgetapprovedbytheendofthemonthandishappytohandoffthe
managementofGGCtoothersiftheywanttotakeitover.

"Ifmestayingisthebestthing,great,"hesaid."Therearesomepeoplethatdon'twantmeinvolved,
andIcanlivewiththat.Icangoontootherthingswithmylife.IjustwanttolookbackandseeGalt's
Gulchsucceed...There'sbeennoschemestotakemoneywhatsoever."

(/)

AviewofsomeofthelandintheGulch.PhotocourtesyofJoshKirley

Evennow,everyoneIspoketowhohadbeeninvolvedinGalt'sGulchChilesaidtheywanttoseethe
originalideacometofruition.

"Almostalltheinvestors,buyers,andmyselfareincrediblypassionateaboutmakingthisworkandwe
aredoingeverythingpossibletodoso,"Berwickwroteinanemail."Thereisonlyonepersonwho
standsinthewayofanychanceofGGC'spotentialsuccessandthatis[Johnson]."

Berwickisstickingtohislibertarianprincipalsandnottakingpartinanylegalactionagainsthisformer
partner.He'sresignedtotakingaheavylossinthisaffair,buthecanevidentlyaffordtodoso.Kirley
saystherearepeoplewhohavesunktheirlifesavingsintobuyinglandintheGulch,andhe's
determinedtomakesurealltheinvestorsgetthelandtheypaidfor.

Thecommoditiestrader,whoisperhapslessofanantistatist,hasretainedtwoChileanlawfirmsand
intendstousethecourtstoforceJohnsontogiveupcontrolofGGC,afterwhichtheinvestorscould
attempttoworkoutthezoningissuesandeventuallyliveontheland,finallyestablishingtheirlong

soughtRandianparadise.Accordingtohim,Johnsonaskedfor$5millioninexchangeforhanding
overcontrolofGGC,butKirleybalkedattheprice.WhenItriedtoconfirmthisaccountwithJohnson,
hesaidonly,"There'sbeendifferenttalks."

Johnson'spositionisthathehasgivenKirleyallthedocumentsthathe'saskedfor("Thatisalie,"said
Kirleybyemail),andthathe'sreadytostepdownhejustwantsKirleytocomedowntoChiletosort
thingsout.("I'mnotgoingtohangaroundinChilewhilehecontinuestostall,"Kirleysaid.
"NegotiationscanbedoneoverSkypeoremail...Iwillreturn[toChile]oncehehasturnedover
control.")

ThemostrecentpointofcontentionisthewaterrightsownedbyGGC.InChile,waterandmineral
(/)
rightscanbesoldindependentlyofland,andoneoftheproject'smostimportantassetsisthewater
underthegroundthatitcontrols.Johnsoniscurrentlysellingoffsomeofthesewaterrightstoraise
capitalandproviderefundstoshareholders,amovethatthealreadyunhappyinvestorsoppose.They
saythatit'sshortsightedtosellthewateroutrightandthatJohnsonhasn'tevenfinishedpayingforthe
assethe'stryingtosell.Kirleypointedtothisasanotherexampleoftheman'sshadybusiness
practices.

"Hesaidheownedthewaterrights,saidtheyweresovaluablethatwecouldleaseofftheextraflow.
Inactuality,henevermadethepaymentsandstillowesnearly[$2million]beforeweownthewater
rights.Nowheisworkingwiththesellertosellthosewaterrightsforlessthanhetolduswewouldbe
leasingthemfor,"wroteKirleyinanemail.

"Gottaadmit,theguyhasballs."

(/)

MapoftheGulch'slocationfromanearlyversionoftheGGCwebsitethatisnolongeronline

IfyoubelieveJohnson,GGC'sdifficultiescanbechalkedupmostlytotheproject'sincrediblerunof
badluckhisoriginalpartnerswerementallyunstableliars,andtheChileansheworkedwithwereall
tooeagertotakeadvantageofanAmericanwhowasperhapsinoverhisheadrunninganoperation
ofthatmagnitudeandcomplexityinaforeigncountry.

AlesscharitableviewisthattheGulchwasascamfromthebeginningandJohnsonhassimplybeen
takinginasmuchmoneyfromstarryeyedlibertariansashecouldwithoutkeepingmuchinthewayof
recordsorseriouslytryingtomaketheirvisionareality.SomeofthoseinvolvedinGGCsharea
versionofthisopinion,andacouplefounderssaynowthatJohnsononlypretendedtobelievein
libertarianphilosophyBerwickclaimedinanemailthatJohnsontoldhimhe"hatesanarchistsand
libertarians."

Youcouldalso,ifyouweresopoliticallyinclined,seeGGC'sfailureasanindictmentofthelibertarian
principlesthatGulchersholdsodear."Unregulatedcapitalism...ispresentingsomeproblems!"ishow
agleeful,schadenfreudefilledGawkerblogpost(http://gawker.com/aynrandscapitalist
paradiseisnowagreedylandgrab1627574870)summedupthemess.Anditmaybetruethat
someofthefounders'aversiontogovernmentrunlegalsystemsandrelianceonhandshake
agreementshurtthemBerwick'sassumptionthatheownedhalfofthecompanywithJohnson,
thoughheapparentlydidn'thavedocumentsthatstatedasmuch,seemsoddlynaveinhindsight.

Libertariansarenormallywaryofgovernmentsandotherlargeorganizations,butinthiscasethey
seemtohavebeentootrustingoftheideaoftheGulchingeneralandJohnsoninparticular.There's
nothinguniquelylibertarianaboutputtingfaithinpeoplewhosaytheyshareyourbeliefs,orabout
wantingtobuildautopiafarfromthegrubbyrealityofyourcurrenthomebuttheideathatyoucan
buyyourwayintoparadiseseemstailormadeforthatpoliticaltribe.Lookingback,itseemsthe
problemwasthattheGulchersweren'tasskepticaloftheschemeastheyshouldhavebeensimply
becauseitwasspunbytheirideologicalallies.

"Aconofthismagnitudecouldonlyhaveexistedinthelibertariancommunitybecause[Johnson]used
theirparanoiaanddistrustofthegovernmenttosay,'Puteverythinginatrust,Iwon'ttellanybodywho

youare,don'tletanyonefindoutyou'reinvesting,andIpreferyouusepreciousmetalorBitcoinssoit
(/)
can'tbetraced,'"Kirleysaid."Itreallyworkedoutwell,whetheritwasintentionalorjusttheperfect
storm."

FollowHarryCheadleonTwitter(https://twitter.com/HCheadle).

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TOPICS:aynrand(/tag/ayn+rand),Galt'sGulch(/tag/Galt%26%2339%3Bs+Gulch),Galt'sGulchChile
(/tag/Galt%26%2339%3Bs+Gulch+Chile),chile(/tag/chile),santiago(/tag/santiago),JoshKirley(/tag/Josh+Kirley),KenJohnson
(/tag/Ken+Johnson),JeffBerwick(/tag/Jeff+Berwick),theDollarVigilante(/tag/the+Dollar+Vigilante),libertarians(/tag/libertarians),
utopias(/tag/utopias),WendyMcElroy(/tag/Wendy+McElroy),scams(/tag/scams),GGC(/tag/GGC),bitcoin(/tag/bitcoin),capitalism
(/tag/capitalism),Lawsuits(/tag/Lawsuits),TheDoItWellandLeaveSomethingWitchyIssue
(/tag/The+Do+It+Well+and+Leave+Something+Witchy+Issue)

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