As I’m sure many of you know, for the past couple of years there’s been a lot of talk about a project aimed at American “libertarians” on a property close to Santiago, in Curacavi. The name? Galt’s Gulch Chile, after Ayn Rand’s novel.
When I first heard of this project, my initial reaction was, “Curacavi? Where on Earth are they planning to get the water rights for a project of this size? The valley is basically dry.”
From the very start, I have been warning, in private, anyone who has asked me about this project. My initial warnings were always based on the water rights issue. I didn’t really know anything about the people involved, other than one of the initial ‘founders’ is a misogynistic, arrogant and aggressive individual who I have studiously avoided in Chile for several years and who was running a quasi-legal (at best) immigration scheme. So I also pointed people towards this person’s blog posts, to show them the type of person they were dealing with. This individual was eventually dumped from the deal and tried to set up his own project, creating more problems. The guy who took over is, apparently, and by all accounts, a sociopathic liar and a crook. Not having met any of them, I can’t say for sure what I really think of them. But their online presence is troubling, to say the least.
Now everyone involved is fighting and suing each other. It’s a mess.
So when more and more people started asking me about the project, I started to take a deeper look. I have had several clients who were asked to be involved in the start up of the project…Smart and savvy US investors who are not easily fooled. They all confirmed my initial feelings about the deal. I have been contacted by people involved in the project and asked if I’d like to help market it. The answer was always, “No way”.
And then I started talking to a friend, who happens to be an investigative journalist, about the project and he immediately started digging, turning up law suits all over the place, investors who had been scammed out of their money (some of whom urged him to write a story, but many of whom were desperate for the story not to break as they feared, rightly, for their investment) and other suspicious activity.
Investors- with millions of dollars between them- were signing contracts that have absolutely no legal status in Chile. Contracts based on New Zealand law, poorly drafted and not even signed before a Chilean notary. It appeared blind trust was the order of the day, whilst everyone simply handed over bags of money and, in some cases, their life savings. And this was still happening until just a few weeks ago.
Who knows where all the money has gone. I doubt the investors are going to see it again.
I have known most of these facts for many months, at least since November of last year. I communicated, in private, my opinions to absolutely everyone who asked me about the project. I hope that I managed to save some people the heartbreak. I posted the following comment on the Economist article about the project (as soon as I heard about the article):
And now, finally, one of the initial investors has gone public. You can read the article here (the comments are even more enlightening and explain in far more detail how the scam went down).
I have conflicting feelings about these investors. On the one hand, I feel desperately sorry for them. Getting scammed is a horrible experience, whether it’s for a few dollars or a lot more. It feels like a violation, something really personal. And then the guilt hits home, that feeling of, “What could I have done to avoid this, I feel so stupid”.
But on the other hand, they completely failed to do their due diligence. Any decent Chilean lawyer who was looking after their client’s interest would have advised, strongly, that there was something wrong. My own lawyers would have done so. I have Chilean friends who are lawyers and they would have done so. Even an incompetent lawyer would had some serious doubts. A little bit of digging would have revealed all of these problems (it took my journalist friend less than a week to turn up everything he did).
The saddest part is that this is no doubt going to tarnish the image of Chile in the eyes of small to medium scale foreign investors. Some of the comments in that article suggest that Chile is a typical South American country, where corruption is rife. This couldn’t be further from the truth. Chile is a fantastic country, a place I am genuinely proud to call home, a place where the law is respected and business is easy to do. People shouldn’t be scared off because of the actions of a few crooks. This project fell apart due to the actions of unscrupulous Americans taking advantage of their own. This was not a scam run Chileans, it was a scam run by Americans. It can happen anywhere. Unfortunately, it happened in Chile…And it’s getting the country a bad reputation.
If you are interested in investing in Chile, then talk to someone who knows what they’re doing and can act as an intermediary. It could be me, it could be someone else, but talk to someone. There’s an expression in Spanish…”Lo barato sale caro”…”Cheap ends up expensive”. Always pay someone to act on your behalf, always employ a good lawyer to check everything over and never sign any official document in Chile if you’re not at the notary.
If you’re interested in setting up a community based farm, then let me know and I will find a property for you where this can genuinely and legally be an option. If you’re interested in real estate in Chile in general, then just get in touch and I’ll help out in the only way I know how…ethically and honestly.
I’ve lost count of the number of potential clients I’ve ‘lost’ because I’ve been truthful with them about their objectives and requirements. If I think you’re not a good fit for a property or are living in a dreamland, I’ll tell you. I have no interest in making a fast buck. This is why I end up as friends with the majority of my clients, because I spend so much time talking to them and getting to know them.
I’m in Chile for the long-haul and my reputation is key. Unfortunately, some of Galt’s Gulch Chile’s founders couldn’t care less about their reputation, nor Chile’s. I hope the issues are resolved and investors get their money back. But if you are, or have been interested in the project, walk away…and fast.