The first call came in December 2011. It was a real estate broker from Mexico offering an exciting opportunity: A buyer wanted to pay Stephen, a financial manager from the Midwest, $65,000 for his timeshare in Cancún – far more than the $47,000 he had spent on it six years earlier.
Stephen agreed. He loved his two-bedroom condo, with its view of the Caribbean and an entrance lined floor to ceiling in marble. The concierge treated his family like royalty.
“We felt like kings and queens,” Stephen said.
He had originally bought two weeks a year so his children could spend time near the ocean. As they grew older and joined sports teams, there was less and less time for family vacations.
The telemarketer’s call seemed fortuitous.
But there was one catch: Stephen – then 54 – would have to first cover a Mexican federal tax of $3,900 that would be held in escrow, and credited back to him when the deal closed.
Looking back, that was the first sign that he was getting duped by a telemarketing scam, one that would end up costing him nearly $1.8 million as he tried time and again to sell his timeshare.
“It’s almost like an addiction,” said Stephen, who asked that only his first name be used because he doesn’t want his employer to know. “I kept thinking the next person was going to help me get out of it.”
According to a U.S., government investigation, over the past decade, thousands of Americans – many of them elderly – have fallen prey to a complex scheme involving one of Mexico’s most violent cartels.
In timeshares, the cartel has found a business venture whose profits, U.S. government officials believe, now rival the business it is most known for drug trafficking.
The Jalisco New Generation Cartel, commonly known as CJNG, started its timeshare fraud business in Puerto Vallarta and has now largely taken over the Cancún timeshare market as well. It has expanded the fraud network to at least two dozen call centers that contact U.S. owners of property in those two cities, as well as other areas popular with North American retirees, including Acapulco.
Buying into a few weeks of a condo is seemingly hawked on every corner in many Mexican resort towns, and people on vacation buy-in, only to find later that they’re paying for the time they don’t use and are looking to sell.
“You have these people that are desperate,” said Brian Rogers, head of a consumer advocacy nonprofit, called Timeshare Users Group, which provides information on how to avoid scams. “The victims are limitless.”
Based on their investigation, a U.S. government official estimated the fraud from Mexico-based companies at hundreds of millions of dollars a year.
“It’s more cash in hand than they make from drugs,” said the official, who spoke on condition of anonymity. “The overhead is really low for this.”
Few of the telemarketing firms have been criminally charged, partly because the business shape-shifts, abandoning shell companies and bank accounts as authorities identify them, then quickly creating new ones.
The U.S. Treasury Department has sanctioned 40 Mexican companies associated with the Jalisco cartel and its telemarketing scam. But few people have been arrested.
The Federal Bureau of Investigation has received an average of 1,400 complaints per year, related to timeshare fraud from Mexico, over the past five years. And more people are reporting timeshare fraud every year.
“What we’re seeing here is an increase in the number of complaints,” said FBI Deputy Assistant Director James Barnacle. ”That’s evidence that the fraud schemes are growing.”
One of the most prominent cases was brought in 2019 by the U.S. Attorney’s Office for the Eastern District of Louisiana, which indicted six Mexican men for defrauding dozens of Americans out of $20 million. Four of the six – including the head of the company and an accountant – have been arrested and convicted. One was sentenced to five years in prison, one four years, and two got 18 months.
The cartel hires call center workers who speak perfect English and teaches them to lure unsuspecting Americans into believing they are steps away from freeing themselves from their timeshares, which often charge maintenance fees owners no longer want to pay.
The employees are taught to craft documents with names of companies, brokers, and attorneys that appear legitimate. In some cases, they steal the identities of actual lawyers and even real estate agents and promise they are them.
Even if the timeshare owners do their own research, they’ll find slick websites.
If victims do catch on, the cartel has another layer prepared to draw them back in: New employees call them, sometimes months later, saying that their information was found in a police raid of a call center. They tell them they have been scammed and are owed restitution.
Enter people posing as government investigators ready to help get to the bottom of the fraud, whose services come with their own costs – often far less than what the victim has lost.
The money flows through Mexican banks, which cannot be counted on to take a stand, according to Spencer McMullen, an attorney in Mexican law based in Guadalajara. His office sees an average of one timeshare fraud case a month.
“Mexican banks are not doing their job,” McMullen said.
And the cartel controls its employees with an iron fist. Last June, cartel leaders turned their fury on eight call center employees who local news outlets reported had tried to quit. Their remains were found in 45 black plastic bags at the bottom of a canyon outside Guadalajara.
The cartel expects its workers to make calls to Americans every day from 6 a.m. to 9 p.m., working in shifts, according to government officials.
The scam, spanning more than a decade, had spiraled into multiple complex operations involving 99 wire transfers, more than 150 people, and at least 12 Mexican bank accounts, with Stephen making the final payment in December, according to documents reviewed by USA TODAY and The Courier-Journal in Louisville, Kentucky, part of the USA TODAY Network.
