JS 101: What Happened with Galt’s Gulch, Chile?

May 20th, 2015 by Jason | Comments Off on JS 101: What Happened with Galt’s Gulch, Chile?

Terence Gillespie explains what went wrong with Galt’s Gulch in Chile.

Terence Gillespie fell in love with Chile and was interested in purchasing property there. As a Libertarian, he really liked the concept of Galt’s Gulch property development in Chile, but more and more news came out that the property was a ‘bum deal’. The property was being vetted by guys like John Cobin and Jeff Berwick, so what happened? Terance talks on what he found out, jurisdiction issues, and much more on today’s show.

Key Takeaways:

[4:40] John Cobin’s books about Chile helped Terance discover Chile.

[14:10] Little did the three other founders know, Johnson had cut them all out of the deal.

[25:10] Why is Terance so interested in this?

[28:20] When property deals like this go wrong, what’s the jurisdiction?

[38:50] There are so many international scam artists out there because no body has jurisdiction on them.

[48:25] Once you take a title in the name of an entity, you’ve invited the state in.

Mentioned In This Episode:

mcgillespie.com

wendymcelroy.com

dollarvigilante.com

I, Psychopath documentary

http://en.wikipedia.org/wiki/Psychopathy_Checklist

Tweetables:

Ayn Rand said the one thing the gov should do is have a court system, so disputes can be settled without violence.

Have your money in one jurisdiction, have your life in another, have your passport in another, have entities in a fourth.

The psychopath and the socialist have one thing in common, they both run out of other people’s money very quickly.

Transcript

Jason Hartman:

It’s my pleasure to welcome Terence Gillespie to the show. He has worked at IBM, GE, UCLA. He’s played Jazz, piano on cruse ships. He’s an instrument rated pilot, a business man, a song writer, author of the upcoming The Outliers Handbook. He’s attempting optimize every aspect of life one article at a time. He’ll give out his website later in the show. He’s got a BS in computer science with a minor in music from the University of Florida.

We’re here to talk to us about today is a fascinating story about a development called Galt’s Gulch. Those of you who are familiar with Ayn Rand, the very prolific author and author of the Fountain Head, Atlas Shrugged, many, many other books that by the way are fantastic. Might recall from Atlas Shrugged the book or the movie series, Galt’s Gulch and that’s what we’re here to talk about today. This development in Chile, maybe possible improper dealings that went on there. Terance, welcome, how are you?

Terence Gillespie:

Fantastic, how are you, Jason? Good morning.

Jason:

Yeah, it’s good to have. So, Galt’s Gulch. Your story is really interesting. I guess you got married. You were looking for maybe possible second choice country in which to live or maybe move someday. Is that correct?

Terence:

Yeah, that’s correct. Eight years ago I got married and I said, hey, I want to live in a beautiful place and I’d also like to have an alternative place in the United States and one alternative country outside of the United States. Went through all 190 of them, the ones that are calling themselves sovereign states now a days. Came up with three, Chile was number two, and got very serious about vetting Chile, just fell in love with it because it’s very similar to Northern California, just a beautiful place.

Jason:

Good stuff. So, you’re in Northern California now.

Terence:

Yes.

Jason:

Okay, so you were looking for this secondary option and it sounds like your choices were, I guess, Switzerland was your first choice, Chile was your second choice, and Colombia was your third, right?

Terence:

That’s exactly right, yes.

Jason:

So, you went down to Chile, spent some time there and you, how did you hear about this Galt’s Gulch development, this real estate deal there being promoted? It’s being promoted by the way or was being promoted very heavily on the internet, I saw it in a lot of places.

Terence:

Well, amazingly enough. The first time I was there with my wife, we had lunch in the Curacavi area. If we had decided to stop by at the time, we couldn’t have, because there wasn’t no Galt’s Chile in 2011. I heard about it when I was with my son for two months down in Colombia. I was looking at a website and caught on my eye, one of the libertarian websites described Galt’s Chile and having just been there I was just fascinating with it and read all about it.

Jason:

Okay, so that’s what happened. Now, what did you discover about Galt’s Gulch. I mean, I guess when you heard about it, you did some investigation, some looking around? Tell the story.

Terence:

Well, at that point I had been down there with a friend of mine for about 21 days and we vetted the entire country of Chile. That was my second trip. I was intimately familiar having read John Cobin’s books about the entire country. I was just fascinated and fell in love with the country. So, I was interested to see where exactly what location would be chosen for this and it was an excellent location and I see the reason for that excellent choice because Cobin who has been there for about 20 years made that choice, so I was interested to see where it was. I just got drawn into it. I really had no idea that anything had gone wrong with the project until when Wendy McElroy’s article came out and of course that got me even more fascinated with it.

Jason:

Okay, so now, well, John Cobin, what books did he write? I’m not familiar with him. He wrote about Chile I guess?

Terence:

A Life in Chile.

Jason:

Okay, great.

Terence:

I think he’s been down there since 1995 with his five kids. He is the libertarian guy down there. So, I thought when I was planning my second trip with my friend down there for 21 days, I had read Cobin’s book and it enabled me to get, you know, three trips out of that one trip, because I had known so much and we were able to plan a detailed itinerary and x out some of the areas we knew wouldn’t be interested in and, I tell ya, by the time we left Chile on that second trip, my buddy and I had specific airports, schools for my children, the exact locations we would choose, so it was a very productive trip.

Jason:

Okay, so who is Wendy McElroy?

Terence:

She is a libertarian writer. She’s got a website, WendyMcElroy.com. I frequently read some of her news story and her articles and just enjoy her take on things and was fascinated to see that she and her husband had purchased a option on a lot on Galt’s Gulch Chile. Periodically she was writing about it, what they were going through, learning Spanish, preparing for the trip, and I just got drawn into that story, because it could have been me and I thought, hey, it might be me.

Jason:

So tell us how it developed with Galt’s Gulch then and what ou discovered.

Terence:

Well, what I discovered is that it was just all unraveling and I just couldn’t figure out why, because it seemed that the people involved were very respectable. I mean, Cobin’s name was involved with it. Jeff Berwick’s name from the Dollar Vigilante was involved with it. \Wendy McElroy had mad a decision to purchase a lot. So, you’re talking about some very high profile people here and that, a project they would be involved with would go wrong was just drew me into this and I thought, what could have possibly happened with this.

Jason:

So, they lended their names to the project then, I guess, right? This is a real estate development, a subdivision deal, right?

Terence:

Yeah, it’s a real estate development deal in Curacavi, Chile, which is between Valparaiso and Santiago.

Jason:

Okay, so they bought some land and then they were subdividing it and selling lots, right? I don’t think they were selling any actual completed homes, were they?

Terence:

No and you have to clarify they right off the bat, because the way it unfolded is four people got together, it was John Cobin’s idea, he brought Jeff Berwick down to raise some capital for the project. They signed a partnership agreement with four people, one of them being Kenneth Johnson, Jeff Berwick, John Cobin, and Eyzaguirre and the idea was to use the identity that they started shortly thereafter to start developing and take title to the land that John had found. So, that’s how it got started.

Jason:

Okay, who is John? Who purchased the land or bought the land or found the land I guess.

Terence:

Okay, they formed entity quickly after that. About 20-30 day later Ken Johnson, who was the least known of all these people, had cut everybody out of the deal. Started his own personal entity and took title of the land that Cobin had found for them and negotiated a fantastic price and proceeded to cut everybody out of the deal. It was quite shocking to the other three but for a long time, including the investors who paid for that first purchase, which was done, about 30 days later, they didn’t know that Johnson had cut them out.

Jason:

Okay, so name the parties again. Who started this. I just want to make sure everybody can follow this.

Terence:

The first four partner were John Cobin, Jeff Berwick, Herman Eyzaguirre, Cobin’s partner, and Kenneth Dale Johnson.

Jason:

Okay, so those were the four original founders of this project, you’re saying, right?

Terence:

That’s correct with the largest founder being John Cobin himself and Jeff Berwick and Johnson, they learned about this deal from Cobin. The only reason Cobin reached out to them at all is because he thought, he suspected that Jeff Berwick could bring in capital for the project, that is investors, so when Johnson and Berwick, who had never stepped foot into Chile, but upon the wheels of the jet plan eating the tarmac, within hours, they were hooked up by John Cobin to what could have been the largest deal of their lives. They could do that so quickly, because Cobin had already written the business plan, had already scouted the property. He was just ready to go. All he needed was somebody to raise capital. Jeff Berwick fulfilled that promise of potentially being able to raise capital, he did indeed do so. The problem that is..

Jason:

Do you know how much he raised.

Terence:

Well, there were 76 investors/buyers of property in all and so far ten million dollars have put into the property.

Jason:

Okay, and then what happened?

Terence:

Well, as I said, very quickly thereafter Johnson cut them all out of the deal, although the investors didn’t know that, started his own personal entity and then without doing any due diligence for the first property proceeded to purchase it with investor money generated by Berwick and took title into his own personal entity.

Jason:

Okay, so, how do you know that happened? What is the evidence for that?

Terence:

Because at this point, Jason, of course, no body would have known this at start and most of the investors didn’t know that for a long time and even some of the principles didn’t know that, but at this point, I’ve done so much digging and I’ve gotten so many documents that are publicly available in Chile through the court office, I’ve pieced things together, I have a very detailed timeline and reference in my seven-part series on Galt’s Gulch Chile and the first part of that series is extremely detailed about what transpired and I was just able to slowly zero in on..

Jason:

Tell the listeners about that series. When you say series, do you mean a series of blog articles?

Terence:

Yes, I do.

Jason:

Okay and where can they find those?

Terence:

You can find them on my website Mcgillespie.com. There’s a little box there, it’ll say Galt’s Gulch Chile Series and you can easily find all seven. I am adding to it.

Jason:

Okay, sounds good. So, what else happened? So, he bamboozled the other investors, you’re saying, the other partners, right?

Terence:

He did indeed.

Jason:

Okay, by kind of stealing it out from under them and what did this mean to the buyers and the consumers? I mean, investors are sort of thought of as people who, you know, their big kids, in other words, they should kind of be ready for stuff like this to happen, but just the regular consumers that were home buyers, maybe they need a little more protection, right?

Terence:

Yes, I would say the biggest thing that happened from the buyer’s point of view is there was a material omission of the people involved. They all believed that Jeff Berwick and John Cobin were involved. Those were the biggest names. Those were the only names people know. It’s probably still the only names that people know. They would have – so, they would impart, there’s a lot of good will associated with those name, especially John Cobin and to a lesser extent Berwick, but they were able to track – People would think that they were involved in the project and say, wow, hey, if these guys have vetted this property, I’ll bet it’s a really good thing. They would never know that those principles that attracted them to the property had already been cut out by the time they even went down there to check out the land.

Jason:

But, did these guys really vet the property or were they just marketers looking to collect a check for raising money or something, you know.

Terence:

Oh, well John Cobin thoroughly vetted the property.

Jason:

Okay.

Terence:

Yes, very thoroughly.

Jason:

So, how did this happened then if he vetted. I mean, I guess not really just vetting the property, but vetting the deal, the whole structure, everything, right?

Terence:

Well, if I focus on Cobin for a minute. He’s been to every city in Chile, I think except two. He’s just been there for 20 years, you know. Lived down there on and off for 20 years, so familiar with it. Finally choice what really is an optimum location. If you want to get a bunch of libertarians together and have very convenient access to some beautiful land by the vineyards, very close to Santiago, but not too close. About 45 minutes away from Santiago, wow, Curacavi is definitely the answer. Now, it gets a little bit more murky when I say thoroughly vetted because there were a couple of things wrong with the first property. Galt’s Gulch Chile consists of two property.

The first one is El Penon, the second one El Lepe. The first property that was purchased was El Penon. There were two things wrong with El Penon that had to be corrected in order for it to be a viable property for many people to live in. The first was, the first and primary one was water rights. Part of the original delivery of Cobin and Eyzaguirre for property number one El Penon was to inscribe and consolidate the water rights so that the land could be further subdivided beyond its current limitation of 12 into a viable property where hundred people could share that property.

However, they could not follow through on that promise, because Johnson had cut them out of the deal so quickly, wouldn’t return their phone calls, and then shortly thereafter the first thing Cobin knew, he was being accused in the media of having recommended a bum property, which he did not.

Jason:

Who is being accused of that? Johnson?

Terence:

John Cobin was being accused.

Jason:

Oh, Cobin, got it.

Terence:

By Johnson. So, Johnson was essentially accusing Cobin of not following through on something that he wouldn’t let Cobin follow through, because he cut him out of the deal and wouldn’t return his phone calls.

Jason:

Right, okay.

Terence:

There’s an additional thing that had to be a challenge for El Penon that had to be overcome and I hear that they were environmental restrictions that had to be relieved. I’m less familiar with all of that, that kind of stuff. However, the key to all of the land development obstacles being removed was always Cobin and Eyzaguirre, because they speak fluent Spanish, are intimately familiar with the local courts, know the development process, were very excited about inscribing and consolidating those water rights. They just couldn’t get access to the land, because Johnson had cut them out.

So, we may never know if Cobin and Eyzaguirre would have been 100% successful in removing those obstacles. All was know now is that Johnson accuses them of recommending a bum piece of land, which they didn’t. They recommended a perfect piece of land in a great country for the deal, were enthusiastic about removing those obstacles for development and were simply cut out of the deal before they could do so.

Jason:

Wow, okay. So, who got burned here? Who were all the different parties that got burned?

Terence:

The first person to get burned was Cobin. He had negotiated a $250,000 finders and business plan fee and also for that same money he had agreed to inscribe and consolidate the water rights with his partner and there was a certain percentage of each sale that he was going to be doing. He’s the first one that got burn. Thereafter it is difficult to find any party, whether they be an investor or a partner other than Johnson that has not gotten burned. I would say all other parties, depending on when they delivered their money, what they expected. Perhaps you would say the third person to get burned would be Jeff Berwick, because he had a verbal agreement that he was 50/50 partners with Johnson, but did not know that Johnson would soon remove his name from the entity, Johnson’s personal entity. So, Berwick for a long time was marketing this deal in full swing not even knowing he had been cut out of the deal.

Jason:

Wow, okay, alright. What about the buyers? How many people bought property in the development?

Terence:

In total, eventually 76. However, as in most deals, a lot of the money is, the preponderance of the money was in maybe in the first ten, so they lost significant chunks of money. I’m just going to ball park it and say, 400-700,000 dollars, each, perhaps, very general of the firs ten.

Jason:

So, how did they lose that money? They bought properties. It sounds like maybe what happened, I’m just speculating here, that they purchased properties from an entity that didn’t own the properties, is that because, the entity got, you know, basically got the land stolen out from under it by Johnson, I think you said, right?

Terence:

Yes, that’s basically correct. I mean, the land was owned by an entity, but it wasn’t owned by the entity that the investors thought it was owned by. They were…

Jason:

When you say investors, let’s distinguish investors versus home buyers, is there a distinction there?

Terence:

No, but I can safely say investors here at this point, because at this point no home buyers have come in to try to look at individual lots. These are investors.

Jason:

Oh, okay. So these are all people that were investing in the development company, not in purchasing specific lots in the development, as a real estate investor, right?

Terence:

Yes, but in return for their initial investment, they were guaranteed first choice of the lots and a certain percentage of the lemon orchards and income that was promised to them if they were part of the first four and then there was a second round of founders, so they were promises, they were going to get their first choice of a lot of which to build on, anyway, but they will also get income generated through various means, reported various means from the property. Lemon trees, water rights, all sorts of other uses for the property that supposedly generate an income.

Jason:

Okay, alright. Wow, this is amazing. So, what happened to the money? I mean, they took that, the three partners, really, that were left. Berwick and the two others, Eyzaguirre and who is the third one?

Terence:

Berwick, Cobin, Eyzaguirre.

Jason:

Oh and Cobin, of course. Sorry. I can’t forget Cobin, he’s the biggest name of them all. Okay, so those people took the money, it sounds like, from these investors, but they just didn’t know that the land had been stolen out from under them, so why didn’t they just give the money back to the investors?

Terence:

You know, you’ve just made a very common, understandable mistake there, Jason. The thief happened so quickly that the investors didn’t know that all of the partners of the four had been cut out except Johnson, because Johnson cut them out.

Jason:

So, Johnson had the money, it sounds like you’re going to say?

Terence:

What happened is Berwick was very successful at generating the money. These guys were reading very enthusiastic articles written by Jeff Berwick on the Dollar Vigilante. They were staring at pictures that Berwick put in the articles and they were saying, this is fantastic. You know, Cobin is involved, Berwick involved, he’s enthusiastic, and they didn’t even know the name Johnson. So, they sent their money looking at a picture of Berwick and knowing about Cobin and said, this is going to be great. They sent their money down not knowing that they were transferring money into the pockets of somebody they didn’t even know, Johnson.

So, the marketing was completely disconnected from the reality of what the money was purchasing and that continued to be the case for maybe six or seven months. People were very enthusiastic about this project. Jeff Berwick thought it might be successful, but had no idea how successful it was going to be.

The money just poured in and I guess the metaphor would be you’re staring at a picture of person number one and you write a check and you don’t realize it went to person number four. Like, how did that happen? I thought I was buying this picture, but by the time this person invested, Johnson had cut everybody out of the deal. So, the money didn’t go where the initial investors had every reason to believe that it was going.

Jason:

Where’s Johnson now? What happened to him or does anybody know? Did he just disappear with the money or what?

Terence:

He did disappear with the money for a while. Last October, as you can imagine when you have 76 people who have given ten million dollars, they get upset when their phone calls are returned.

Jason:

Yeah, I hope so.

Terence:

Eventually they did fly themselves down to Chile and they entered the property looking for Johnson. Turns out Johnson was hiding in the bushes.

Jason:

You’re kidding, like are you serious?

Terence:

Oh, Jason, you can’t make up..

Jason:

This is like Saddam Hussein hiding in that hole, you know?

Terence:

Very much so. You just ca’t make up some of the real things that have happened here. So, the investors end the property, five or six of them, looking for Johnson.

Jason:

When you say enter the property, you mean, entered huge massive piece of land with many acres, right?

Terence:

Yes, but there was a Hacienda and there’s several places to stay in the Hacienda, there’s an office, there are farm materials and grounds. There’s places to stay, there’s an office there and everything.

Jason:

Okay, so he happened to be there? Tell what happened.

Terence:

Well, he…

Jason:

How many of the investors came? They all flew down together?

Terence:

I’m going to ballpark, I’m thinking it was six in all.

Jason:

Okay, alright.

Terence:

So, yeah, they entered the property and asked the very realistic question to the farm workers, have you seen Ken Johnson?

Jason:

Right.

Terence:

And it takes them, I dunno, takes hours. I think eventually Johnson shows up at night or the next day, but it takes them hours to figure out he’s been hiding in the bushes the whole time.

Jason:

Oh my God.

Terence:

As I say, you can’t make this stuff up. Here we have a very complicated land development deal happening in Chile and Johnson doesn’t even speak Spanish or read Spanish, so he needs to walk around with a translator at the hip, his name is Ian Thornton, just to figure out what people are telling him.

Jason:

His translator is Ian Thornton, okay.

Terence:

Yes and so he sends his translator to the investors on the property to try and figure out what’s going on and they say look, we just want to talk to the guy, where is he, and yeah, it just doesn’t go well. This was later, terribly and inaccurately described as a raid. It was not a raid. It was simply investors who paid for property entering their own land, but of course, you can’t really say that’s true because Johnson had taken title to the property in his own corporate entity.

Jason:

So, it really wasn’t their land, because they were swindled, it sounds like, right?

Terence:

Yeah, so you have to make this moral, legal, stipulation every time you speak about the thing.

Jason:

Yeah, well, it should have been their own land is what you’re saying, right.

Terence:

Yes, morally it was their land because they paid for it. Legally, it wasn’t. So, it just get so murky. Now, things get even more murky if you can believe it.

Jason:

Okay, go for it.

Terence:

No, I won’t do that, but what I want to point out to your listeners and ot yourself is that everything, almost everything you read about Galt’s Gulch Chile nowadays, I guess including in my series, happened down stream of the initial thief. The initial thief took place in the first 30 to 45 days. It was so efficient, it was so quick, it was alarming, it was bold; it was so immoral, it was so unpredictable. It was so outrageous that people couldn’t believe it and some very smart people spent the next 11 months trying to figure out what exactly happened here. It’s only with that information that I can tell you this complete story now. It certainty wasn’t obvious to the people as they were going through it what had happened.

Jason:

Yeah, hindsight is 20/20 as they say.

Terence:

Yes.

Jason:

So, what is your involved here. I mean, I just got to ask. What’s your motivation in doing this? Are you being paid anything? Do these people advertise with you or anything like that? Is there any connection or are you just kind of interested in this? Tell us.

Terence:

Well, I’ll tell you what. I’m a libertarian writer, as I said, I finally got to the point where I could maybe afford a place outside of the country, vetted the whole world, and then son of a gun, if I don’t see a creature invading one of the most beautiful places in one of the countries that I chose and to make matters worse I think what got me interested in the project is trying to untaint libertarianism with what had occurred.

Jason:

yeah, but libertarianism not tainted, right? Well, let me just say a couple of things and I’d love to get your comments on them. First of all. The Galt’s Gulch thing, I never really understood what the big deal was about it. I mean, they sort of marketed it as though, I mean, I remember seeing Jeff Berwick’s videos on it and so forth. I’m not saying he said this, okay, I mean, Jeff Berwick is a friend of mine. I know who the guy is. I mean, he’s not like a close friend, but I know him and I think he’s nice guy.

I’ll put it that way, okay, but you know, it’s like, it was being marketed as though these people are setting up their own individual sovereign libertarian government. It wasn’t that. It’s just a development in a country that, for the last decade or so, has skewed more to the libertarian side. I mean, big deal. I didn’t get the big deal, okay, so you put that wrapper on it, it’s going, you’re going to charge 50% more than just buying another piece of land in Chile, you know? I really didn’t get it.

I just did not strike a chord with me and I lover libertarianism. I love the message that some of these guys are putting out there, but so what’s the big angle? So what, you live with a bunch of libertarians, you don’t have any slackers, you’re still paying taxes to the Chilean government or the US government, because you have to declare all world wide income, right? I mean, what’s the big thing?

Terence:

You’re revealing your sophistication, Jason. I can tell you know a lot about real estate, you’re very savvy at the world. However, I will say the link between libertarianism and fiasco was being made, my evidence is the first six articles that came out about Galt’s Gulch Chile and the negative things that were going on them, were just waiting bash either Ayn Rand, who I’m no, what do they call it, I’m no apologist for Ayn Rand, but they were just waiting to bash her, her book, and they were just waiting to bash libertarianism. They just couldn’t wait to excuse people who like to be free of just not being able to deal with each other. I mean, that was the sentiment that I learned was in the media.

Jason:

Well, I mean, so what? Democrats have disputes amongst each other all the time. Republicans have disputes. The green party people sue each other. Everybody defrauds each other in every ethnicity and political party and ideology. I say big deal to that, but I don’t know, I don’t think it’s an indictment against libertarianism, but that said, what is the role of the government here.

I mean, certainty the US government is going to say, we don’t care, unless he was promoting the properties here, which I guess you may be able to argue that, but what about the Chilean government. Did they step in? I mean, is there any government help here for these libertarians? I mean, Ayn Rand said the one thing the government should do, well, not just the one thing, but is they should have a court system, so disputes can be settled without violence.

Terence:

Yes, how ironic. Well, it’s very interesting you bring up jurisdiction, because depending on who you ask, I will tell you I think is the real story, but depending on who you ask, you can cite jurisdiction in Chile, the United States, because the preponderance of investors were from the United States or you could go with England or New Zealand, because the entities that they had created to take title to the land were New Zealand trusts and in those contracts that said New Zealand had the jurisdiction and so once you do that, you’re separating enforcement with the country of origin, which is Chile with jurisdiction, which is New Zealand, which was part of the trust that held one of the entities that owned the land. So, jurisdiction gets very murky.

Jason:

This is one of the reasons I think there’s so many scam artists in the world of international expat this and that, you know, libertarian ideology because there’s no jurisdiction. I mean, I remember going to a conference in Belize, which is a third world country I wouldn’t want to live in, but you know, it’s being promoted by libertarians all the time like it’s some great place and I also had John McAfee on my show who would really argue with that quite a bit and he provided a lot of evidence about Belize…

Terence:

I followed all that, that was, just as fascinating as Galt’s Gulch Chile.

Jason:

You’re definitely right about that, but all these guys were there promoting, not all these guys, but some of them were promoting these crap investments. These crap projects, a condo hotel in Panama and I just know even if that was in the US, it would still be a crappy investment. You know, you’d just have no enforcement. It’s funny that most of these promoters that talk about international everything, they all live in the US or at least they have a home in the US. They haven’t relinquished their citizenship. They are kind of full of crap a lot of these guys. I mean, honestly, they really are.

Terence:

Well, as you know..

Jason:

I’ve had them on my show and I’m nice to them and I think it’s interesting. I mean, look, I started a whole podcast around this topic, because it’s interesting to me, but I just think it’s a lot of window dressing, largely. I think most of them really ultimately love the US or at least, they don’t hate it enough to relinquish their citizenship, that’s for sure, and they most – most of them have homes here.

Terence:

I agree with you that if you read the international hype of these people who supposedly have international street cred like Berwick. I don’t really think he does, but he claims to have it, you would think that Occam’s razor or the laws of physics no longer apply when you leave the United States.

Jason:

Yeah.

Terence:

How did that happen? You mean, there’s no gravity in Belize?

Jason:

Yeah, great point, I know. There’s no, it’s completely lawlessness there. There’s a lot of lawlessness. I mean, let me just mention something else and please make your point about Occam’s razor, because I love that, but you know, everybody I interview it seems like from these various countries whether it be central, South America, you know what I always here? Their Skype connection stinks, they always say something like, oh, well the power went out for an hour this morning, so I had to reschedule the interview. I mean, this is…really? You think this is so great? Are you kidding me? As far as the real estate deals, they are not just that good as far as – I mean look, I’ve been to 74 countries. I’m leaving for Europe tonight. I just, I don’t know man, I think the US is a lot better than most people care to admit.

Terence:

You know, you’re almost summarizing an article I wrote after I was exhausted writing about this deal. I just wanted to write a four paragraph article telling people, you know, guys, a plane ticket and a rental cabana anywhere in the world is going to get you what you need. You don’t have to get involved in the tar pit of a land development deal, you know, 6,000 miles away. I was amazed with the buddy of mine, we were down there for 21 days and all we did was purchase a plane ticket. I mean, as exotic as you think going to Chile is, it’s not, you can do it the instant you decide you can, you just buy a plane ticket and then, son of a gun, if you don’t just rent somewhere, I was renting for, you know, four times less than I pay for my mortgage in the United States, okay. Now, I’m in Chile with a plane ticket, I’m renting, I could rent in perpetuity theoretically and pay less than I am paying now and all I’ve done is rent. I’ve got no commitments. I’ve done nothing.

Jason:

I know, it’s so easy. It’s a much better choice and even if you, look it, you live in Northern California, you’re in the Napa Valley area, okay. So, even if you said, hey, I’m going to move Phoenix or LA, I would advise you to rent first so you can figure out what area of the city you like, you know?

Terence:

Absolutely.

Jason:

I mean, that’s just wise advise for anybody. You don’t have to dive in with both feet and change your whole life and put down hundreds of thousands of dollars on something.

Terence:

Yes and that’s the ironic conclusion that I came to with most places. I lived in a rent controlled apartment in Hollywood for 14 years and..

Jason:

Yeah, that’s an awfully good deal. Rent control is a terrible idea, but it’s a great deal for the tenant.

Terence:

Yes, yes and I actually had to bribe a guy to get in there, because he was, you know, anyway, I had to bribe a guy. It was the best deal of my life, I’ll probably never make a better real estate deal and you know, it’s interesting. I look back at that 14 years of my life and, you know what they called me? A resident! You know, a person who rents – in Hollywood their very interested in having Nevada residency, but actually living in California and I used to tell them, what do you call somebody who rents a condo in Las Vegas? You call them a resident. So, stop getting caught up in having to own something. Every time you read a magazine, you have to own something in the South of France…

Jason:
Let me tell ya, I love that you’re saying this, because it’s so true. I’ve almost all of my life been a home owner and I own a lot of income property, okay, scattered all around the country in different states and cities, and I’ve owned apartments, single family homes, all of that good stuff, I had hundreds of tenants over the years. I think real estate as income property is the most historically proven asset class in the world, okay, but I rent my own place, because especially if you’re renting a high-end place, the rent to value ratio is so skewed in favor of the tenant and against the landlord, it’s just such a better deal, you know, there’s this huge delta between the price and the rent, especially when you go to the higher-end.

Now, if you’re going to live in a $150,000 house, I think you should probably own that house that you live in, but if you look at the mobility factor, the fact that the job market is some what anemic. The best thing you can have on a resume is mobility, you know? Be able to move. If you tied to a house – I mean, I think you should own property as an investment, for sure, but you don’t need to own the place you live and I’ll tell ya, one of the metaphors for this I think is really well said by the pastor Tim Timmons.

When I was sitting in church one day many years ago and he said, and this was in Southern California, and he was talking about materialism in Orange County, California, imagine that, you know, such a materialistic place, for sure. He was talking about materialism and explaining that, look, we’re just trustee, we get to control things from birth to death and that’s it! In other words, we’re all renters! You don’t really own anything.

Terence:

Oh my gosh, you’re just music to my ears here. I have a couple of phrase to try and encapsulate this and in part that wisdom to people. I say, so, Ted Turner sits around with how many hundreds of thousands of acres in Montana, but all that really happened was when people say they own land is you take documents from one filing cabinet, move it to another, and then everybody pretends they are a owner. I don’t think it works that way. Well, here I was in this rent control apartment for 14 years. I had accumulated three houses and I was on the buy houses and the John Swab making it big on little deals.

Jason:

Well, hey, that’s good advice though.

Terence:

Oh, I met John Swab. Couldn’t say enough about I love the guy. Here I am, but when I was dating, here’s my funny story, I’m dating and I would go out with a woman and I’d bring her back to what I thought was a lovely rent control apartment, you know, and you could see her face kind of drop a little bit and she thought, jeez, you really seemed to be much more successful guy, have a lot more going on.

Now, depending on how it was going with them, I usually would not tell them, because I thought, wow, let’s see where this goes. They have no idea. I didn’t want to say, well, yeah, I own lots of houses, but what does that have to do with me? I don’t need a house, I’m a bachelor. I’ve got this beautiful grand piano in the living room, I’ve got my computer setup. This is all I need. Why would I need to own this? Anyway, it’s just funny when people..

Jason:

Yeah, I know, it really is. It really is. That’s very interesting. Okay, good, well, what else do you want the listeners to know about Galt’s Gulch or just the international expat concept in general? Now, listen, all of this said folks, I mean, I would still like to have a second passport just in case some day I need it, maybe it’ll allow me to travel some different places or something, I don’t know. I don’t really exactly what the benefits are, but there’s a lot of scams in that world, but I’m just saying I wouldn’t mind having one. Everything – I mean, you should know about the world, certainty, maybe you have options in case things go bad in whatever country in which you reside, but just be really careful.

There’s so many scam artists out there, because there’s no real, nobody really has jurisdiction over them. They know how to play the game that, I guess, Doug Casey was probably the first guy that outlined it in the International Man where he said, have your money in one jurisdiction, have your life in another, have your passport in another, have entities in a fourth, that kind of concept and you can’t get these guys, because they’re just immune! They don’t really have a jurisdiction, so that’s very dangerous to be dealing with someone you don’t really have good recourse against.

Terence:

Absolutely, well, you and I were just talking about the benefits of being a renter. Let’s just extend that to what you just said, I found that you can’t be being a visitor where ever you are and therefor I did look forward in getting a second passport for my family. We did actually achieve that goal, but I didn’t necessarily want to get a second passport for them in the country I thought we would end up. I wouldn’t them to still be visitors in Chile, but we ended up getting Colombian passports.

Jason:

Okay, and are they real? You know a lot of those are fake! You gotta be careful.

Terence:

Yes, they are real. I don’t have one..

Jason:

Have you used them? I mean, have you really used them through passport control?

Terence:

My wife used hers and my two sons. They are six and two, they’ve used them. It’s funny because I was the big booster in getting second passports and I’m the one who got the two residency card and they got the actual documents, but even so, I would prefer, what I told my wife is, look honey, if anything happens, what I would prefer is we go down there to Colombia for how ever long we want to, we have family down there. I probably know more about Colombia than I do Chile and then if we feel the need, which I think we should feel the need, we’ll continue on to Chile and then it’ll be optimal, because we’ll have South American passports, but we won’t be citizens of the country that we reside. To turn this around on its head to give you the benefits, I think would be I believer that the illegal aliens that come across the borders in Texas, from wherever they come from…

Jason:

You mean, as Hilary Clinton said, the workers without papers? Illegal aliens is really a politically incorrect, very mean thing to say. Okay, anyway, go ahead.

Terence:

Thank you for your correction.

Jason:

I’m obviously being snarky, but yeah.

Terence:

Well, my theory and I think I can prove this and I do in my book here is where I say that, I think, you can have an illegal alien, whatever the new phrase is, undocumented workers, they can t-bone a car full of nuns and small children, kill them all, God forbid, and the policemen comes, he doesn’t know what to do with them, because they haven’t opted in to any of the jurisdiction adhesion contracts. They end up being strangely untouched.

Now, I say strangely, but I no longer think it’s strange, I think it’s just that they have no driver’s license, they have no, there’s no documents, they haven’t opted in to the jurisdiction and until they do, which is my explanation, by the way, for why all of the free licenses were given out to undocumented workers, let’s say. They want to give them free licenses, because they need their signature on some kind of jurisdictional opt-in.

Jason:

Interesting.

Terence:

Now, let me turn this all the way around to what you were saying before, you know, the benefits of renting, but don’t necessarily be a citizen of the country that you’re at. You get the same benefits if you are renting a hotel ay country you’d like to be for the two weeks. You are renting and you are not a citizen. You have opt-in to none of the standard state adhesion contracts, so I think that’s a good place to be. I think, like yourself and myself, I’m going to be the same gentlemen I am here whatever country I am. I’m going to be very polite.

Jason:

You’re not going to be the ugly American, yeah, good.

Terence:

No. All I have to do to not be the ugly America is speak one syllable of the second language or even have the first passport.

Jason:

Except in France, because there you’ll always be considered the ugly American. They’re not going to like you no matter what.

Terence:

You can speak perfect French to them and I’ve seen it happen and they’ll still scowl at you. Yeah, anyway, so I don’t know if we’re getting too far off track, but I have a very brief list that I think are good listen for Galt’s Gulch Chile.

Jason:

Okay, yeah, please. Let’s get on that.

Terence:

On my second article, The Creature from Galt’s Gulch, I think is extremely..

Jason:

Paraphrasing G. Edward Griffin, the Creature from Jekyll Island, yeah. He’s been on the show a couple of times, he’s great.

Terence:

He’s fantastic. I have learned a lot from him. I think it’s very important that the sophisticated people are just human beings learn about this creature called psychopaths. I know the term is all the rage, but I mean it in the literally sense. I mean, you can the Robert Hare checklists of psychopathy and you can go through it and ask yourself, am I seeing one of these creatures here? Now, in Johnson’s case, I’ve got just dozen of eye witnesses that say, yep, total sociopath. I think it’s very important to learn to recognize it and here’s what I do for the listener. There is a YouTube video called I, Psychopath which is an excellent documentary and you can follow one around for an hour and you can see how they act. Try to get familiar with that type of person. They have their ways and if you can just..

Jason:

Okay, so it’s just a film, what is it a documentary or?

Terence:

BBC documentary called I, Psychopath.

Jason:

I, Psychopath. Okay, I gotta look that up. That’s very interesting.

Terence:

And then just Wikipedia the Robert Hare checklist and if you have a suspicion.

Jason:

Robert Hare?

Terence:

Dr. Robert Hare.

Jason:

How do you spell Hare?

Terence:

Hare.

Jason:

Okay.

Terence:

Try to get that checklist. It’s on Wikipedia and if the hair on the back of your neck stands up or if you can’t understand why up is down and down is up when you’re dealing with certain people, go down that checklist and try to think if you may be dealing with one. It’s only 1-3% of the population. Most people don’t have experience with them, but if that person could been eliminated from Galt’s Gulch Chile, there was plenty of money to make a great development deal happen. It was brought to its knee by one psychopath and I say that with full knowledge that I’m not a psychologist, but with lots of interviews and lots of study, lots of checklists, I think we’ve got one on our hands there and he ruined the deal down there.

Jason:

Interesting. I’m loving this check list by the way, the first one is superficial charm and I gotta tell you something folks, people who are con artists are really nice, friendly, generous people, and when you steal from others, it’s kind of easy to be generous, because you usually have a lot of money, okay, and you didn’t actually have to earn that money in a real way, so you can afford to be very generous because there was no real cost in acquire that money to you. So, they tend to buy people. They’re always buying, they’re always buying dinner, they’re always buying drinks, they’re always the generous one, right, and they are always really nice. They are like the nicest people! You know, people can’t realize that is the stock and trade of a con artist is they’re nice, you know?

Terence:

Well, what i like to say is that the psychopath and the socialist have one thing in common, they both run out of other people’s money very quickly.

Jason:

Right, great point. Yeah, Margaret Thatcher take-off, yeah. You know, the problem with socialism is that eventually you run out of other people’s money, but that’s great, yeah.

Terence:

Okay, the second on my check list is, we’ve all heard about this unicorn of allodial title. I think there are some places left on the earth where you can actually own land without a superior land lord, that is the state. At least, try to give it a shot to find it..

Jason:

In other words, everybody has a perpetual lean on their property, because it’s called property taxes.

Terence:

Yeah, it’s independent of any superior land lord, that’s what a allodial title means, it’s an old title related to the land ownership by occupancy and defense of the land. Now..

Jason:

Okay, what countries don’t have some ongoing tax like that, do you know off hand?

Terence:

There are countries where that’s been completely wiped out. The United States, if you can believe it, still had little places left.

Jason:

Really?

Terence:

But here’s why people don’t know that, because the United States is they’re referred to as federal land patents. So, people are Googling perhaps an allodial title and they can’t find anything, they go, oh, this doesn’t exist. Well, try federal land patents and you’ll get a little bit more information. Now, that’s, I don’t want to get your hopes up, but what I’m saying is you can at least give it a shot, okay, because what you’re purchasing, as you know, Jason, in the United States if you read the thing, it’s fee simple title. It even says it’s a lease. You’re purchasing a lease.

So, when people walk around the United States saying I own this house, they are using a conventional phrase to try and convey what they’ve done with a piece of land. Point and fact, if you look at the legalities of it, they are now a fee simple title holder of lot number whatever that gives them, you know, a lease with that particular state. That’s just the realities of it. I don’t want to be disparaging about it, but you know, the first way to get free here is to start using words correctly.

Jason:

Very interesting, okay.

Terence:

in Galt’s Gulch Chile though, they didn’t take title into the name of a person, but into the name of an entity. Well, once you take title in the name of an entity, you have asked the state to form an entity and you’re now under the auspices of the state whether you like it or not, so everything you do with a piece of land owned in a corporation, you’re kidding yourself if you think having taking title in the name of a corporation you can now remove the state from your dealing. You’ve invited the state in to be the dealing.

Jason:

That’s an interesting take of entities. Wow, I’ve never heard that kind of take. So, what you’re saying is don’t use entities because you’ve sort of given the state license to interfere with your ownership?

Terrence

Yes, you have asked them to interfere and this happens with the 5013c churches. Once they opt-in to that entity, which is a corporation, 5013c, just a type of a corporation. Once they take title to their church land in that 5013c, they have opt-in to all sort of adhesion contracts that they will later complain about, but the problem is that their signature is in that opt-in. I’m not saying this is easy, but I’m saying the first way out of this is to understand what’s actually occurring.

So, what I would say hey, if you can find a loyal title or in the United States a federal land patent, do it. There are two lawyers in this country that could accomplish this task and I believe it’s so complicated I think they would both have to talk to each other to accomplish it, but at least try. Second thing is, don’t…

Jason:

I mean, do you want to say where those properties are? Do you know?

Terence:

No, I don’t really want to talk more about it. It gets complicated and I just don’t think people can find..

Jason:

We’re running low already. Okay, go ahead.

Terence:

Let’s move on to the third thing. The third thing is if you’re going to decide to put land into an entity, at least try to shift the liability into the entity itself, which is the purpose for entities anyway and away from the lease holders. As a matter of fact, with developments such as Galt’s Chile, I’d say okay, take title in a corporation, put all the liability in that corporation just like the multinationals do, and make the ownership into long term license for the land holders, so instead of saying, hey, I sold them a lot, don’t sell him a lot, just tell him upfront, dude, I want to shield you from liability and I’m going to sell you a 99 year lease that’s renewable and you’re buying a lease. If you want to change the price, build that into the supply and demand price and that’s what we’re doing.

Jason:

The problem with that is, I mean, it’s an interesting, I mean, you have interesting ideas here, but in particularity, like you’re not going to be able to finance that property very well. The lenders won’t like the lease aspect, it’s just, conceptually, from a very macro picture, I get it. Okay, interesting, go ahead.

Terence:

I think you’re right, but when you relate that to Galt’s Gulch Chile, they purchased the first property for 1.2 million dollars outright. They didn’t have in loans, so they were in a position to do that.

Jason:

Right, but maybe they want to refinance it later, you know, who knows, right.

Terence:

I’m not saying it’s easy, yeah, I understand. Now, the last thing, the final thing, I would say, the 1 Corinthian 6 and I say this regardless of anybody’s beliefs. When you escalate a disagreement between a brother or a friend or a business person to the state, you’ve got to understand that you’ve just escalated the matter to your inferior.

Jason:

That’s an interesting point too, yeah, okay.

Terence:

You can’t expect to get a superior result by escalating to an inferior entity and when you get involved to a court situation, think about, I understand it’s hard to swallow the money you might have lost. I know maybe you thought that this was the agreement and you’re losing a friend or you’re in some situation where you just think you’re being wronged. As hard as that is, if you escalate to the state, you are escalating to your inferior and you are going to lose money. You’re going to give money to lawyers, you’re going to lose everything you were clinging to in the first place. So, I mean, to a Christian I would say don’t escalate your brothers and sisters..

Jason:

Here’s the deal with litigation most of the time, folks. First you get burned by the other party, they steal from you basically or screw you over in someway and then you get burned and screwed over by your own lawyer after that. That’s pretty much the way litigation works most of the time, unfortunately. Not to say that I don’t engage in it. That’s the way it works most of the time. I mean, I am hunting. I’ve got a case right now where I’m suing who I believe is a crooked property manager in Kansas City, Missouri. So many people have come forth because of that case and said that he’s cheated or cheating them currently too. I don’t know. I kind of feel like sometimes it’s just your solemn duty, but you are exploiting it to the state, you never know what’s going to happen and…

Terence:

Oh, I’m not saying that people who have done that, yeah, there’s been time where I’ve been tempted and I’m not in any way going to disparage people who have no choice. If you do have a choice.

Jason:

Try to avoid it whenever possible, that’s good advice.

Terence:

These are the kinds of tips I’m writing this book to my sons, they are only six and two, but my ideal reader is them in their 20s and I just feel this desperate need to tell them all of these tricks that we’ve been  discussing in all areas of their lives, because I think in the future, we tend to criticize outliers now. We break them now and we discard them from the statistical sample, but I think in the future and sometimes in the present, you gotta take the outlining data points and instead of discarding them, you have to say, well, how did you succeed?

You are totally outside of every norm, but you know, nobody is touching you and you seem to be succeeding and you could say something like, well you gotta listen to Jason Hartman’s podcast, because we told you that if you want to succeed and an outlier, you’d be renting, not owning in Belize or you would be not opting-in to the states adhesion contracts by feeling the need to be a citizen of that country, why not just be a visitor of that country? Most people would say, well, that takes away all my sense of security and you can tell them, well, if you really need that sense of security, then you’re not going to have it. You’re better off renting or not being a citizen or you know, any such number of combinations of things spread across all the areas of your life.

Jason:

Yeah, very interesting, very interesting. Good stuff. Well, Terance, this is fascinating. Did you finish that by the way?

Terence:

I’m almost done with the first volume. It’s like 800, yeah.

Jason:

Give out your website one more time, if you would?

Terence:

It’s McGillespie.com.

Jason:

Where do you get the Mc from?

Terence:

I went to a bar in Ireland in the year 2000 when my father had died and I looked, I couldn’t believe it, you know with this name Gillespie all my life and it was just a beautiful wooden sign that said McGillespie. I thought, you gotta be kidding me. All this time I’ve been a Mc.

Jason:

Oh, I got it, I got it. You really just go by Gillespie then. Yeah, okay.

Terence:

Also it’s my father, so I’m the son of my father. A way to honor my father who passed away in 2000.

Jason:

Oh, got it, got it. Good, good stuff. Okay, well, any closing thoughts? Let’s just wrap this up. This has been a long and winding discussion, but it’s been fascinating.

Terence:

Well, the story goes every where, Jason. It just keeps unraveling. I hope there’s going to be restoration for the owners, but at least we can maybe via this podcast provide some tips for future such deals, but we could talk forever about this project, but I think we’ve said enough.

Jason:

We sure could, we sure could. Terance Gillespie, thank you so much for joining us.

Terence:

Thank you, Jason.

Announcer:

This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network Inc. exclusively.

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