US sanctions Mexican cartel members for fraud

The US Treasury Department announced sanctions Thursday against members or collaborators of the Jalisco Nueva Generación Cartel who allegedly engaged in a timeshare fraud side business that allegedly targeted older Americans.

Ryan Donner, a real estate agent in the tourist destination of Puerto Vallarta, on Mexico’s Pacific coast, said the fraud was rare but highly sophisticated.

The cartel is best known for producing millions of doses of the deadly opioid fentanyl and smuggling it into the United States, posing as drugs like Xanax, Percocet or oxycodone. These types of pills cause about 70,000 overdose deaths a year in the United States.

But cartel members and collaborators apparently decided to branch out and swindle millions of dollars out of people who wanted to sell their timeshares in Mexico. The scam focused on Puerto Vallarta, in the state of Jalisco, which is an area dominated by the cartel. Known by their acronym CJNG, the group inspires so much fear in Mexico that they are often referred to simply as “the four letters.”

The Treasury Department’s Office for Foreign Assets Control (OFAC) imposed sanctions on Eduardo Pardo Espino —a fugitive from a drug trafficking charge in the United States_, as well as six other people and 19 tourist companies or Mexican real estate. The sanctions freeze any assets that individuals or companies have in the United States and prohibit US citizens or companies from transacting with them.

Brian Nelson, Treasury Under Secretary for Terrorism and Financial Intelligence, stated that “the CJNG’s deep involvement in timeshare fraud in the Puerto Vallarta area and elsewhere, which often targets elderly and can defraud victims of their life savings, is an important source of income that supports the overall criminal activities of the group.”

The scammers contacted people, often Americans, to sell timeshare properties in Puerto Vallarta.

In an alert issued in 2023, the FBI said scammers contacted prospective sellers via email to say they had a buyer waiting, but that the seller had to pay taxes or other fees before the agreement could be carried out. It seemed that once the money was paid, the deals evaporated.

According to the FBI report, the agency’s Internet Crime Complaint Center received in 2022 “more than 600 complaints with losses of approximately $39.6 million from victims who were contacted by fraudsters regarding timeshares they own.” in Mexico”.

Donner, an agent for Ryan Donner & Associates, a real estate firm in Puerto Vallarta, said that in the past two years, two people who had apparently been contacted by the scammers had requested his company’s assistance.

“It’s not often, but it has happened,” said Donner, who in both cases was able to deter people before they made any payments.

Donner said the scammers sent potential sellers fake contracts and official-looking documents from the Mexican tax authority that apparently said taxes were due on the potential sale.

“They have contracts, they have documents that appear to be official documents, it would be very easy to fall into the trap of paying them,” Donner explained.

“If a company contacts someone and says they have a buyer for a property and all they need is money, that’s a huge red flag that it’s some kind of scam,” Donner said. “This is not how companies usually work.”

He added that neither he nor the possible victims realized that a drug cartel might be involved.

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