First, cartels turned to drug trafficking. Then avocados, real estate and construction companies. Now, a group of Mexican criminals known for their brutality are infiltrating elderly people and their timeshares.
Operation is relatively easy. A cartel employee posing as a salesperson calls timeshare owners and offers to buy back their investment for a large sum of money. And they ask for upfront fees for everything from advertising listings to paying fines to the government. The representatives disappear after convincing the victims to send large sums of money (sometimes reaching hundreds of thousands of dollars) to Mexico.
U.S. officials, who were not authorized to speak publicly, say the scheme is based on the cartel's efforts over the past decade to relentlessly target timeshare owners in the U.S. and Canada through dozens of call centers in Mexico. It is said to have generated hundreds of millions of dollars in profits for Jalisco New Generation. U.S. officials say they bribe employees at Mexican resorts to divulge guest information.
This scam represents the latest evolution of Jalisco's new generation, which has established itself in both illegal and legal sectors of the economy. Using only telephones and convincing scripts, cartel employees are victimizing people in multiple countries.
And even those employees are vulnerable to the cartel's ruthlessness.
Last May, the bodies of eight young Mexican men who worked at a cartel-owned call center were found in dozens of plastic bags in a ravine on the outskirts of Guadalajara, Jalisco state.
This cartel typically preys on retired seniors who want to sell their assets and leave as much money as possible to their families. Victims interviewed by the New York Times said they lost more money to scammers than their initial investments in timeshares in Jamaica, California and Mexico.
“I've grown old just like these clients,” says Michael Finn, founder of Finn Law Group in St. Petersburg, Florida. The group represents thousands of people facing various forms of timeshare fraud. “When someone talks to us on the phone and sells us a dream, we tend to trust them.”
Finn realized just how serious this type of fraud has become four years ago when he received a call from a desperate woman who had sent $1.2 million of her life's savings to Mexico so her mother could sell her timeshare. I noticed that.
The timeshare industry is rapidly growing, with sales expected to reach $10.5 billion in 2022, up 30% from the previous year, according to the American Resort Development Association. The association says about 10 million U.S. households own timeshares, and they spend an average of about $22,000 a year on the investment, on top of about $2,000 in fees. Most timeshares are beach resorts.
The growth in this field coincides with a 79% increase in timeshare fraud complaints received by the FBI over the past four years, but for scams originating in Mexico, the FBI is only able to investigate with the cooperation of local authorities. Only if And American law firms cannot bring civil suits in Mexico unless they hire qualified Mexican lawyers.
Over the past five years, American timeshare owners have been defrauded out of $288 million through various types of fraud, including those perpetrated by cartels, according to the FBI. The real number is likely higher, as the FBI estimates that approximately 80% of fraud victims never file a report.
“Victims don't want to come forward because they're embarrassed and hide it from their families,” Finn said.
In October 2022, a retired couple, James, 76, and his wife, Nikki, 72, were brokered the sale of their Lake Tahoe timeshare by a person believed to be a real estate agent from Wally Free Vacations in Atlanta. He said he received a call asking him to do so. California, to a wealthy Mexican businessman. They asked that their last names not be published because they were “deeply embarrassed” to have been scammed.
As their daughters grew up, the family no longer used the vacation spot they bought for about $8,000 in the 1990s, so the couple jumped at the opportunity to sell.
James said the scam started with small fees, a few thousand dollars here and there meant to settle Mexican government registration fees for “cross-border transactions.” He was fined by Mexican authorities for various violations and was told that if he did not pay, he could be extradited for violating the law, and the fees became even higher. At one point, James said, the scammers convinced him to invest in new commercial real estate in Mexico.
After about 20 payments, the couple transferred nearly $900,000 to various bank accounts in Mexico, according to bank records reviewed by the Times.
According to the FBI, this type of fraud is not that unusual. The FBI says victims like James and Nikki typically send money to bank accounts held by members of the Jalisco New Generation Cartel.
The couple said they have used up their entire life savings and are now in debt. They borrowed about $150,000 from one of his daughters and sold James' childhood home, but they say they never got a cent back.
“If I asked them, I'm sure they'd say, 'How can you be so stupid?'” James said of his daughters. “And I asked myself the same thing. I used to think I was pretty smart.”
According to a review of the emails by The Times, the scammers presented themselves as salespeople or officials from Mexico's central bank and told them that all they had to do was pay “one more fee” and everything would be cleared and the funds released. He kept promising.
However, each time a payment was made, a new fee was imposed.
Mexico's central bank said in a statement that it was aware of timeshare fraud being carried out in its name and warned people not to fall for it.
Late last year, Ms. James received desperate messages from alleged agents who claimed a colleague had been jailed in Mexico for trying to resolve Ms. James' case, according to recorded calls and emails reviewed by The Times. started receiving.
“Please do everything you can to bring my friend/boss home. He misses his family so much and it hurts to hear him talk, if you want this problem solved.” It’s our only hope,” a recent email read. “The amount owed to him is $157,786.61.”
James said she was considering taking out a second mortgage to pay for that amount until her daughters stopped her.
The scam targeting timeshare owners is financial, but in Mexico it can be deadly.
All eight Mexicans found dead on the outskirts of Guadalajara last year worked at a call center in central Guadalajara run by the Jalisco New Generation cartel, U.S. officials said. Local prosecutors said they searched the center and found a mop with red stains, a blackboard with the names of foreigners and details of timeshare members.
A New York Times reporter recently visited the call center and found it closed, with police cars parked outside. The building was located in an upscale residential area across from a park. Parents were walking their children to school.
Hector Flores, founder of the Group of Light and Hope, which scours Jalisco state for the bodies of disappeared people, said he knows of about 30 people who have disappeared from call centers since 2017. But there are probably more, he said. Many families do not come forward out of fear.
State prosecutors did not respond to requests for comment.
Founded about 15 years ago, the Jalisco New Generation Cartel has grown to become one of the most powerful cartels in Mexico. In recent years, it has expanded into the legal field of economics, such as selling avocados to the United States.
In Puerto Vallarta, a popular beach town and cartel stronghold, Mexican hotel workers are routinely pressured by criminal organizations to divulge guest information, said James Barnacle, the FBI's deputy director who oversees financial crimes. It is said that he is being subjected to
Barnacle said Mexican hotel and timeshare companies were aware of the breach and the U.S. government had warned them to start cracking down.
U.S. authorities are particularly concerned about Mexico-based Vidanta Group, one of the world's largest timeshare resort companies. The owner, Daniel Chavez Moran, is a friend and advisor to Mexico's president. Many of Vidanta's customers are victims of timeshare 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 the Vidanta timeshare in 2015. Six years later, he received a call from what appeared to be a New York real estate company offering to buy it for about $500,000. Willard said he lost $100,000 in various wire transfers to Mexico for nothing in return.
When Willard realized he would never see his money again, he contacted the FBI.
“They said there wasn't much they could do because all the money was in Mexico,” he says.
Willard said he has tried to file complaints with the Better Business Bureau and New York's district attorney against the companies that defrauded him. “I didn't get any response from anyone other than 'I'm sorry, I should have tried harder.'”
Barnacle acknowledged that U.S. law enforcement is essentially powerless to combat these scams outside of public messaging.
“People are misusing your data all the time,” Barnacle said. Cartels “don't have to invest in the products they have; they can just pick up the phone or send people an email and trick people into giving up their money.”
The U.S. Treasury has so far sanctioned 40 Mexican companies and about 12 people for timeshare fraud, but few arrests have been made. And as soon as a front company or bank account is closed, a new one is created.
Mexico's “banks are to blame,” said Spencer McMullen, an American lawyer in Chapala, Mexico, who said banks are questioning whether accounts run by cartels use valid addresses or are legitimate businesses. He added that in many cases, they are not checked. “These accounts may have been frozen due to suspicious activity.”
Over the course of two weeks while speaking to the Times, James, a timeshare owner who lost nearly $900,000, gradually realized he would never have his money again. His wife Nikki was furious because she had warned him from the beginning.
“It's not right that you've worked for years and saved up to enjoy your retirement and then have that money taken away from you,” Nikki said.
They started their retirement very comfortably, but are now wondering if they should apply for a part-time job. Nicky is recovering from cancer and expenses are mounting.
“Do I have to work at Walmart now?'' Nikki said.
Emiliano Rodriguez Mega I contributed a report from Mexico City.audio creator Palin Bellows.