U.S. federal agencies said they are cracking down on Mexican cartel-run timeshare scams facilitated by financial entities that often focus on older adults.
Simultaneously, the Treasury Department issued a joint notice with the FBI to financial institutions urging them “to be vigilant in detecting, identifying, and reporting timeshare fraud perpetrated by Mexico-based transnational criminal organizations (TCOs).”
Timeshares involve a lifelong investment to pay for a vacation resort, such as a beachside condominium, where one can visit at scheduled times.
According to federal agencies, the TCOs are using the funds acquired through the timeshare payments to support their drug trade, which involves manufacturing and trafficking fentanyl “and other deadly synthetic drugs into the United States.”
The FBI’s Internet Crime Complaint Center and the Federal Trade Commission reported that 6,000 people lost $300 million from 2019 to 2023 to timeshare fraud in Mexico.
‘A Complex Scam’
Elderly financial exploitation is a growing business for money launderers, which poses a threat to the United States, the agencies said.The FBI said that criminal organizations target U.S. timeshare owners through “complex, often yearslong telemarketing scams” operating out of CJNG-owned call centers located in Jalisco, Mexico.
TCO scammers act as third-party timeshare holders such as attorneys or sales representatives in the timeshare industry.
After acquiring contract information, the scammers then contact the owners to establish credibility, representing themselves as “ready buyers, renters, or investors” before luring them into “timeshare exit, re-rent, and investment scams.”
“As part of their sales pitch, scammers often provide fraudulent offer letters and other real estate or investment documents on behalf of purported buyers, renters, or investors,” the federal agencies said. “They also use high-pressure sales tactics, claiming that the offer is time-sensitive to convince the victims to act quickly.”
After the victim makes the first payment, the scammer either shuts down contact or continues to ask for more money.
“Scammers may also provide the victims a spoofed online bank account dashboard showing false balances to reassure the victims that the escrow account is legitimate and convince them to send additional payments,” the federal agencies reported.
“Unsolicited calls and emails may seem legitimate, but they’re actually made by cartel-supported criminals,” Mr. Nelson said, according to a Treasury Department statement. “If something seems too good to be true, it probably is.”
The timeshare fraud scheme began more than 10 years ago when a Mexican attorney and businessman devised the plan and shared it with the CJNG. The CJNG eventually took over the operation and removed the attorney “as an unnecessary middleman.”
Sanction Authorization
Building on that work, the OFAC issued the latest sanctions under Executive Order 14059, which authorizes the Department of Treasury to sanction entities that have engaged in transactions with known drug traffickers.The executive order was enacted in 2021 in reaction to the increased sale of fentanyl and other drugs on the internet which poses a threat to national security, the order stated.
“As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or the possession or control of U.S. persons are blocked and must be reported to OFAC,” the federal agencies stated.
“Treasury and our partners are deploying all tools available to disrupt this nefarious activity, which funds things like deadly drug trafficking and human smuggling, and we encourage the public to use our resources to stay vigilant against these threats,” Mr. Nelson said.
