Nayarit, Mexico
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The U.S. Treasury Department has sanctioned Kovay Gardens, a beachfront resort in Mexico's Nayarit state, accusing it of operating as part of a fraud network directed by the Cártel Jalisco Nueva Generación (CJNG) that allegedly defrauded American tourists of millions of dollars, according to U.S. officials cited by CBS News.
Treasury officials said the 22-room property near Puerto Vallarta functioned as what they described as a "vertically integrated fraud factory," where prospective buyers were drawn into timeshare sales presentations promising luxury stays and rental income.
After signing contracts, victims were allegedly overcharged and their financial data routed to cartel-linked call centers that launched additional scams, sometimes posing as lawyers or officials offering to recover losses for a fee, as CBS News reports.
According to the Treasury, CJNG consolidated control over timeshare fraud operations in the Puerto Vallarta and Bahía de Banderas region over more than a decade, using local businesses and associates to facilitate payments. Officials identified cartel commander Audias Flores Silva as overseeing timeshare fraud networks in Nayarit, with lieutenants collecting proceeds from linked call centers.
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U.S. authorities say a March 2023 alert about Mexico-based timeshare fraud generated more than 850 suspicious activity reports totaling roughly $330 million in potentially fraudulent transactions. The FBI has received reports from about 6,000 victims who said they lost nearly $300 million between 2019 and 2023, plus another $50 million in 2024, though officials believe losses are underreported.
The sanctions are part of a broader campaign to disrupt cartel revenue streams. In August, the Treasury sanctioned more than a dozen companies and four individuals accused of helping the same cartel run resale and rental schemes targeting mostly older Americans.
"We will continue our effort to completely eradicate the cartels' ability to generate revenue, including their efforts to prey on elderly Americans through timeshare fraud," Treasury Secretary Scott Bessent said at the time.
The CJNG, whose leader Nemesio Oseguera Cervantes, known as "El Mencho," carries a U.S. reward of up to $15 million, is widely known for drug trafficking but has expanded into other illicit businesses. Analysts say its influence has grown as rival criminal groups fractured, allowing it to extend operations into territories previously controlled by competitors and diversify income sources beyond narcotics.
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Tags: Mexico, CJNG, Jalisco New Generation Cartel