The cartel first cut its teeth in drug trafficking. Then avocados, real estate and construction companies. Now, a Mexican criminal group known for its brutality is targeting the elderly and their timeshares.
The operation is relatively simple. Cartel employees posing as sales representatives call timeshare owners, offering to buy their investments back for generous sums. They then demand upfront payments for everything from listing ads to paying government fines. The agents convince their victims to send large sums of money to Mexico – sometimes reaching hundreds of thousands of dollars – and then disappear.
The scheme has netted the cartel, Jalisco New Generation, hundreds of millions of dollars over the past decade, according to U.S. officials who were not authorized to speak publicly, through dozens of call centers in Mexico that relentlessly target American and Canadian timeshare owners. They even bribe employees at Mexican resorts to leak guest information, US officials say.
The scam represents the latest evolution of the Jalisco New Generation, which is entrenched in both illegal and legal sectors of the economy. With little more than a phone and a convincing script, cartel operatives victimize people in many countries.
And even these workers are vulnerable to cartel cruelty.
Last May, the remains of eight young Mexicans who worked at a call center owned by the cartel were discovered in dozens of plastic bags in a ravine on the outskirts of Guadalajara, a city in the state of Jalisco.
The cartel usually preys on elderly, retired people who want to leave as much money as they can to their families by selling assets. Several victims interviewed by The New York Times said the money they lost to scammers exceeded the value of their initial investment in timeshares in Jamaica, California and Mexico.
“I’m big, and so are these clients,” said Michael Finn, founder of the Finn Law Group in St. Petersburg, Fla., which has represented thousands of people dealing with various forms of timeshare fraud. “We tend to trust when someone calls us and sells us these dreams.”
Mr. Finn realized how serious this type of scam was becoming four years ago when he received a call from a desperate woman whose mother had sent $1.2 million, her entire life savings, to Mexico to sell her timeshare. her lease.
The timeshare industry is booming, with sales of $10.5 billion in 2022, a 30 percent increase over the previous year, according to the American Resort Development Association. Nearly 10 million American households own a timeshare, the association said, spending an average of about $22,000 on their investment on top of annual fees of about $2,000. Most timeshares are beach resorts.
The industry’s growth coincides with a 79 percent increase over the past four years in timeshare fraud complaints received by the FBI. And US law firms can’t file civil lawsuits because they don’t have jurisdiction in Mexico.
Over the past five years, American timeshare owners have been bilked out of $288 million, according to the FBI, through various types of scams, including those operated by the cartel. The real number is probably around $350 million, since about 20 percent of those defrauded never file a complaint.
“Victims don’t want to come forward because they are ashamed and hide it from their families,” Mr Finn said.
In October 2022, a retired couple — James, 76, and his wife, Nikki, 72 — said they received a call from a purported real estate agent at Worry Free Vacations in Atlanta offering to broker the sale of their timeshare. in Lake Tahoe. California, to a wealthy Mexican businessman. They asked not to be named as they were “very embarrassed” to have been defrauded.
As their daughters grew older, the family had stopped using the vacation spot they bought in the 1990s for about $8,000, so the couple jumped at the chance to sell.
The scam started with smaller fees, James said — a few thousand dollars here and there meant to settle Mexican government registration fees for “cross-border transactions.” The fees got steeper as he was told he had been fined by Mexican authorities for various violations and could be extradited for trespassing unless he paid. At one point, James said, the scammers even convinced him to invest in a new commercial property in Mexico.
About two dozen payments later, the couple sent nearly $900,000 to various bank accounts in Mexico, according to bank records reviewed by the Times.
Scams that go this far aren’t all that unusual, according to the FBI. The agency says that, typically, victims like James and Nikki send the money to bank accounts held by associates of the Jalisco New Generation cartel.
The couple said they had used up their life savings and were now in debt. They even said they borrowed about $150,000 from one of their daughters and sold James’ childhood home, but haven’t seen a cent in return.
“I’m sure if I asked them, they’d say, ‘How could you be so stupid?’ James said of his daughters. “And I wondered the same thing. I thought I was pretty smart.”
The scammers identified themselves as sales representatives and as an employee of the Central Bank of Mexico, emails reviewed by the Times show, and kept promising that if he paid just “one additional fee,” everything would clear and his money would be released.
However, after each payment, a new charge was piled on.
In a statement, the Central Bank of Mexico said it was aware of the timeshare scam being perpetrated on its behalf and warned people not to fall for the scam.
Late last year, James began receiving desperate messages from purported representatives who claimed their colleague was jailed in Mexico after trying to settle James’ case, according to recorded calls and emails reviewed by the Times.
“Please do whatever you can to get my friend/boss back home. He misses his family so much and hearing him feel awful, you are the only hope for this to be resolved,” a recent email read. “The amount outstanding for payment is: $157,786.61.”
James said he considered taking out a second mortgage to pay the amount, until his daughters stopped him.
While the scam targeting timeshare owners is economical, in Mexico it can be deadly.
The eight Mexicans found dead on the outskirts of Guadalajara last year all worked at a call center in the heart of Guadalajara run by the Jalisco New Generation cartel, US officials said. Local prosecutors said that when they searched the center, they found a mop with red stains, blackboards with foreign names and timeshare membership details.
When New York Times reporters visited the call center recently, they found it closed, with a police vehicle parked outside. The building was in an upscale neighborhood, across from a park. Parents walked by, taking their children to school.
Hector Flores, the founder of the Society of Light and Hope, which has been combing Jalisco state for the bodies of the disappeared, said he knew of about 30 people who had disappeared from call centers since 2017. But there are likely more, he said. , as many families do not come forward out of fear.
The prosecutor’s office did not respond to requests for comment.
The Jalisco New Generation cartel, which was founded about 15 years ago, has grown into one of the most powerful cartels in Mexico. In recent years, it has expanded into legal sectors of the economy, including the sale of avocados in the United States.
In Puerto Vallarta, a cartel stronghold and popular beach town, Mexican hotel workers are routinely pressured by the criminal group to leak guest information, according to James Barnacle, the FBI’s deputy assistant director who oversees financial crimes.
Mr. Barnacle said hotels and timeshare companies in Mexico were aware of the leaks and that the US government had warned them to start cutting back.
Of particular concern to US officials is the Vidanta Group, one of the world’s largest timeshare resort companies based in Mexico. Its owner, Daniel Chávez Morán, is a friend and adviser to the president of Mexico. Many of Vidanta’s customers have fallen victim to timeshare scams, according to a US official who was not authorized to speak publicly.
Vidanta did not respond to requests for comment.
Pete Willard said he bought his Vidanta timeshare in 2015. Six years later, he got a call from a purported New York real estate company offering him about half a million dollars for it. After sending various payments to Mexico, he lost $100,000 with nothing in return, Mr. Willard said.
Once he realized he wasn’t going to see his money again, Mr. Willard contacted the FBI
“They said there wasn’t much they could do as the money was all in Mexico,” he said.
Mr. Willard said he tried to file complaints with the Better Business Bureau and the New York attorney general against the companies that defrauded him. “I never got a response from anyone other than ‘I’m sorry, you should have been more diligent.’
Mr. Barnacle admits that US law enforcement agencies are basically powerless to deal with these scams beyond public messaging.
“People exploit your data all the time,” Mr Barnacle said. The cartel does not “need to invest in a product it has. They just had to pick up the phone or send an email to people and, you know, trick them into handing over their money.”
So far, the U.S. Treasury Department has sanctioned 40 Mexican companies and about a dozen individuals for timeshare fraud, but few arrests have been made. And as soon as a front company or bank account is closed, new ones are created.
Mexican banks are “to blame,” said Spencer McMullen, an American who practices law in Chapala, Mexico, adding that they often don’t check that accounts managed by the cartel use valid addresses and are legitimate. “They could freeze those accounts for suspicious activity.”
During the two weeks that James, the timeshare owner who lost nearly $900,000, spoke to the Times, he slowly realized that he wasn’t going to see his money again. His wife, Nikki, is furious, having warned him from the start.
“You know, when you work so many years and save so you can enjoy your old years, and then it’s taken away from you,” Nikki said, “it’s just not right.”
From the beginning of their very comfortable retirement, they are now wondering if they should apply for part-time jobs. Nikki is recovering from cancer and their expenses are piling up.
“Should I go work at Walmart now?” Niki said.
Emiliano Rodríguez Mega contributed reporting from Mexico City.
