U.S. officials say a luxury timeshare resort near Puerto Vallarta, Mexico, operated as a front for a cartel-run fraud engine, costing American visitors millions. The U.S. Treasury Department sanctioned Kovay Gardens, accusing the resort of operating under the direction of the Cartel de Jalisco Nueva Generación (CJNG). The action also targeted a network of individuals and companies allegedly involved in defrauding U.S. citizens, particularly older Americans who lost their life savings.
For over a decade, CJNG has reportedly controlled timeshare scams in Puerto Vallarta and the surrounding region. At Kovay Gardens, prospective buyers were promised luxury, with unused weeks advertised as potential rental income. Once contracts were signed, credit cards were allegedly overcharged. Customer data was then fed to CJNG-run call centers, which initiated further investment scams. Victims were later contacted by individuals posing as lawyers or officials, demanding additional fees for recovery services, or threatened with legal trouble if they did not pay.
Treasury officials described the operation as a vertically integrated fraud factory. The cartel-controlled resort generated victims for a database supplying targets to boiler-room call centers that extracted payments via international wire transfers.
According to the U.S. government, timeshare fraud networks in the region were overseen by cartel commander Audias Flores Silva. U.S. alerts on Mexico-based timeshare fraud have flagged over $330 million in potentially fraudulent transactions, largely involving Americans wiring money to Mexico. The FBI reports approximately 6,000 U.S. victims reported nearly $300 million in losses between 2019 and 2023, with an additional $50 million in 2024. Many victims, however, do not come forward due to fear or embarrassment.
These sanctions represent a continued U.S. effort to combat CJNG's diversification beyond narcotics, with the cartel also involved in fuel theft, extortion, and financial fraud masked by legitimate-looking businesses.