“The new target of a Mexican drug cartel: seniors and their timeshares

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One of the country’s most powerful criminal organizations, the Jalisco New Generation Cartel, manages operations that offer to buy timeshares from their owners. Then they scam them.

Initially, the cartel began with drug trafficking. Then it moved on to avocados, real estate, and construction companies. Now, a Mexican criminal organization known for its cruelty is transitioning to targeting seniors and their timeshares.

The operation is relatively simple. People working for the cartel, posing as sales representatives, call the owners of timeshare properties, offering to buy their investments for generous sums of money. Then they demand upfront payments for anything from ad postings to supposed government fines. The fake representatives convince their victims to transfer large amounts of money to Mexico—sometimes up to hundreds of thousands of dollars—and then disappear.

This scam has earned the Jalisco New Generation Cartel hundreds of millions of dollars over the last decade, according to U.S. officials who were not authorized to speak publicly on this topic, through dozens of call centers in Mexico that tirelessly seek out U.S. and Canadian timeshare owners. They even bribe employees at Mexican resorts to leak guest information, the U.S. officials claimed.

This scam represents the most recent evolution of the Jalisco New Generation Cartel, a group that is rooted in both legal and illegal sectors of the economy. With little more than a phone and a convincing script, cartel workers are victimizing people in different countries.

Even those same workers are vulnerable to the cartel’s cruelty.

In May of last year, the remains of eight young Mexicans who worked at a cartel call center were discovered in dozens of plastic bags thrown into a ravine on the outskirts of Guadalajara, the capital of the state of Jalisco.

Typically, the cartel seeks to take advantage of retired seniors who want to leave as much money as possible to their relatives through the sale of assets. Several victims interviewed by The New York Times said the money they lost exceeded the value of their initial investment in timeshare vacation properties in Jamaica, California, and Mexico.

‘I’m old, just like these clients,’ said Michael Finn, founder of Finn Law Group in St. Petersburg, Florida, who has represented thousands of people who have dealt with various forms of timeshare scams. ‘We tend to trust when someone calls us and sells us these dreams.’ Finn realized the seriousness of this type of fraud about 4 years ago when he received a call from a desperate woman who had transferred $1.2 million, her entire savings, to Mexico, to sell her timeshare.

The timeshare vacation property industry is booming, with $10.5 billion in sales in 2022, a 30 percent increase compared to the previous year, according to the American Resort Development Association. About 10 million U.S. households own timeshares, the association reported, spending an average of about $22,000 on their investment plus annual fees of about $2,000. Most timeshares are beach resort complexes.”

“The growth of the sector coincides with a 79 percent increase in the last four years in reports of timeshare fraud received by the FBI. However, to investigate scams originating in Mexico, the FBI must rely on the cooperation of local authorities. Moreover, law firms cannot file civil lawsuits because they do not have jurisdiction in Mexico.

In the last five years, American timeshare property owners have been defrauded of about $288 million, according to the FBI, through various types of fraud, including schemes managed by the cartel. The actual figure is probably around $350 million, as about 20 percent of those defrauded do not file a claim.

‘Victims don’t want to report because they are embarrassed and hide the situation from their families,’ Finn said.

In October 2022, a retired couple—James, 76, and his wife, Nicki, 72—said they had received a call from a supposed real estate agent at Worry Free Vacations in Atlanta, who offered to negotiate the sale of their timeshare in Lake Tahoe, California, to a wealthy Mexican businessman. The couple asked that their last names not be published because they were ‘very embarrassed’ to have been scammed.

As their daughters grew up, they stopped using the vacation property they bought in the 1990s for about $8,000, so the couple did not hesitate at the opportunity to sell.

The scam began with small fees, James said, a few thousand dollars here and there intended to pay for registration costs with the Mexican government for ‘cross-border transactions.’ The fees increased as they were told he was being fined by Mexican authorities for various infractions, and that he could be extradited for breaking the law unless he paid the fines. At one point, James recounted, the scammers even convinced him to invest in a new commercial property in Mexico.

After about 20 payments, the couple had transferred almost $900,000 to different bank accounts in Mexico, according to bank records reviewed by the Times.

Scams that go this far are not uncommon, according to the FBI. The agency stated that typically, victims like James and Nicki, transfer their money to bank accounts of partners of the Jalisco New Generation Cartel.

The couple said they had exhausted their savings and were now in debt. They claimed they even borrowed about $150,000 from one of their daughters and sold James’s childhood home, but they have not received a single cent.

‘I’m sure if I had asked them, they would have said, ‘How can you be so stupid?” James said, referring to his daughters. ‘And I ask myself the same thing. I used to think I was very smart.’

The scammers identified themselves as sales representatives and as an official of the central bank of Mexico, according to emails reviewed by the Times, and at all times promised that if he paid just ‘one more amount,’ everything would be resolved and his money would be released.

However, after each payment, a new fee appeared.

In a statement, the central bank of Mexico declared that it was aware that timeshare scams were being committed using its name and warned people not to fall for the fraud.

At the end of last year, James began to receive desperate messages from supposed representatives claiming that one of their colleagues had been jailed in Mexico after trying to resolve the case, according to recorded calls and emails reviewed by the Times.”

“Please do everything you can to get my friend/boss back home. He misses his family terribly, and hearing him is awful; you are the only hope for this to be resolved,” said a recent email. “The outstanding payment amount is: $157,786.61.”

James said he was considering taking out a second mortgage to pay the amount until his daughters stopped him.

While the scam targeting timeshare property owners is financial, in Mexico it can be deadly.

The eight Mexicans who were found dead last year worked at a call center in downtown Guadalajara that was run by the Jalisco New Generation Cartel, according to U.S. officials. Local prosecutors said that when they searched the center, they found a mop with red stains, blackboards with foreign names, and details of timeshare memberships.

When reporters from The New York Times recently visited the call center, they found it closed, with a police vehicle parked outside. The building was in an upscale neighborhood, across from a park. Parents passed by, taking their children to school.

Héctor Flores, founder of the Luz de Esperanza Collective, an organization that searches throughout the state of Jalisco for the bodies of the missing, said he knew of about 30 people who had disappeared from call centers since 2017. However, he said there are almost certainly more because many families do not report out of fear.

The state prosecutor’s office did not respond to requests for comment.

The Jalisco New Generation Cartel, which was founded about 15 years ago, has grown to be one of the most powerful cartels in Mexico. In recent years, it has expanded into legal sectors of the economy, such as the sale of avocados to the United States.

In Puerto Vallarta, a stronghold of the cartel and popular coastal town, Mexican hotel workers are routinely pressured by the criminal organization to leak guest information, according to James Barnacle, the FBI’s assistant deputy director who monitors financial crimes.

Barnacle said that hotels and timeshare companies in Mexico were aware of the leaks and also said that the U.S. government has warned them to start taking drastic measures.

A particular concern for U.S. officials is Grupo Vidanta, one of the world’s largest timeshare resort companies based in Mexico. Its owner, Daniel Chávez Morán, is a friend and advisor to the president of Mexico. Many Vidanta customers have been victims of timeshare property fraud, according to a U.S. official who was not authorized to speak publicly.

Vidanta did not respond to requests for comment.

Pete Willard said he bought his Vidanta timeshare property in 2015. Six years later, he received a call from a supposed New York real estate company, which offered him about half a million dollars for it. After sending several money transfers to Mexico, he had lost about $100,000 without receiving anything in return, Willard said.

When he realized he would never see his money again, Willard contacted the FBI.

“They told me there wasn’t much they could do because all the money was in Mexico,” he said.

Willard tried to file complaints with the Better Business Bureau and the district attorney in New York against the companies that had scammed him. “I never got a response from anyone beyond ‘sorry, you should have been more diligent.'”

Barnacle acknowledged that U.S. security forces are essentially tied when it comes to countering these frauds, beyond issuing warning messages to the public.

“People exploit your data all the time,” said Barnacle. The cartel “doesn’t have to invest in a product they have; they just have to pick up the phone or send an email to people and, you know, trick them into giving them their money.”

To date, the U.S. Treasury Department has imposed sanctions on 40 Mexican companies and about a dozen individuals for timeshare fraud, but few arrests have been made. And as soon as one front company or bank account is closed, new ones emerge.

Mexican banks “are to blame for this,” said Spencer McMullen, an American practicing law in Chapala, Mexico, adding that they generally do not check if the accounts managed by the cartel are using valid addresses and are legitimate businesses. “They could freeze these accounts for suspicious activity.”

During the two weeks that James, the owner of the timeshare property who lost nearly $900,000, was talking to the Times, he began to understand that he would never see his money again. His wife, Nicki, is furious because she had warned him from the beginning.

“You know, when you work for so many years and save to be able to enjoy your old age and then it’s snatched away from you,” said Nicki, “that’s not right.”

They went from starting their retirement very comfortably to wondering if they should now apply for part-time jobs. Nicki is recovering from cancer, and her expenses are piling up.

“Am I going to have to work at Walmart now?” said Nicki.

Emiliano Rodríguez Mega collaborated on this report from Mexico City.

Maria Abi-Habib is an investigative correspondent based in Mexico City covering Latin America. She has previously reported from Afghanistan, the entire Middle East, and India, where she covered South Asia. More from Maria Abi-Habib

Source: The New York Times