That offer to buy your time-share could be from a Mexican drug cartel

April 25, 2024 Canuck

The phone calls were coming on an almost daily basis. Lawyers, real estate agents and people with cash in hand, all looking to purchase Rod Pratt and Diana Paquette’s Mexican time-share at a handsome price.

It seemed like a godsend to the Edmonton couple. On their first trip to Mexico, for a 2016 wedding, they had made a snap decision to invest in a beachfront property in Nuevo Vallarta, on the Pacific coast, just north of the resort town Puerto Vallarta.

But nothing was as it appeared. Even after spending $95,000 US on the time-share and three upgrades, there were room charges, maintenance fees, bills for food, drink and airfare — meaning a week’s vacation still cost $5,000 or more. An amount they couldn’t afford.

“Anything you look at and touch, it’s got a dollar tag on it,” said Pratt, 65. “It’s definitely not all-inclusive.”

By the spring of 2019, they were desperate to unload the time-share. So when a broker from Atlanta cold-called and said he had a client willing to pay $155,000 US, Pratt pounced. A Mexican real estate agent and buyer joined the conversation, and a contract was signed. All that was required to seal the deal were a few, upfront payments from Pratt.

“They have, like, these fees and stuff they wanted for opening and closing… all kinds of little ones,” he said. “Anywhere from maybe $1,500 US to $10,000.”

Sunbathers lie on a tropical beach. There are palm trees and a hotel in the background. — Tourists are seen along the beach in Puerto Vallarta, Mexico, in December 2015. The resort town on Mexico’s Pacific coast is the home of the notorious Jalisco New Generation Cartel, which officials say has been defrauding the owners of local time-shares. (Henry Romero/Reuters)

The supposed deal fell through when Pratt balked at paying as much $30,000 US for “taxes.”

But soon, his phone was again ringing with other lucrative offers. Over the next three years, Pratt entered two more sales agreements, and accepted a short-term rental offer. All the purported deals followed the same pattern — upfront demands for fees, costs and taxes, with the promised payout always a step away. In the end, he estimates he lost more than $200,000 Cdn to the scams.

“They were all saying they were lawyers, they were realtors. They were everything under the sun,” said Pratt. “But none of it was legit.”

Ultra-violent history

The Jalisco New Generation Cartel (known by its Spanish initials CJNG) has existed for only 15 years, yet ranks one of Mexico’s largest and most powerful criminal organizations. It operates in at least 27 of the country’s 32 states, with affiliates across the globe. Its home base is Puerto Vallarta.

Over its ultra-violent history, the group has expanded its activities from drug production and trafficking, to kidnapping and extortion, to less predictable turf like the avocado trade and, more recently, time-share scams.

The cartel “generates substantial revenue for its multi-faceted criminal enterprise through its time-share fraud network,” U.S. Treasury Secretary Janet Yellen warned last November.

A man and woman kiss. They are both wearing bright swimwear and life jackets. — Rod Pratt and Diana Paquette share a kiss during their initial trip to Mexico in 2016, when they bought a time-share in nearby Nuevo Vallarta — a decision they came to regret. (Submitted by Diana Paquette)

“CJNG uses extreme violence and intimidation to control the time-share network, which often targets elder U.S. citizens and can defraud victims of their life savings.”

Any doubts about Jalisco’s new focus on time-shares were put to rest by a horrific massacre in May 2023, when authorities recovered the garbage-bag-wrapped, hacked-up remains of eight young call centre workers from a ravine near Zapopan, Mexico.

The call centre was one of several used by the cartel for real estate fraud, officials said. The six men and two women had reportedly raised the cartel’s ire by trying to quit.

No one is sure just how much CJNG is earning from its time-share frauds; just as it’s not known for certain if the cartel was behind the bogus offers made to Pratt. The FBI says it received more than 600 complaints related to such scams in 2022, with losses totalling almost $40 million US. But other estimates run to hundreds of millions each year — targeting Americans and Canadians who own time-shares in Cancun, Acapulco and Puerto Vallarta.

Jalisco’s diversification is a measure of its success, says Valentin Pereda, a University of Montreal criminologist who researches Mexican gangs.

“When a cartel is successful, the number of employees in its ranks increases and the more employees you have, the more money you need to pay them and to keep them loyal to you,” he said. “At the end of the day, these are business enterprises and they operate largely with that rationale, thinking ‘How am I going to maximize income and minimize costs?'”

The burnt-out remains of a bus are seen along a forested road. — The aftermath of an ambush by the cartel’s gunmen near El Aguaje, Mexico, in October 2019. Thirteen police officers were killed and nine wounded in the attack, which came during the gang’s push into Michoacan state’s avocado trade. (Marco Ugarte/The Associated Press)

Having a wide array of both criminal and legitimate business interests also helps insulate the cartel from the economic disruption of police crackdowns, or drops in the price of street drugs.

Pereda says time-share scams may be particularly attractive because they are unlikely to provoke serious blowback from the U.S. or Canadian governments. Several gang members and businesses have been sanctioned over the frauds, but no one is forming a task force to tackle the problem. “It would be one of many competing priorities when it comes to the cartels and criminal activity,” he said.

Sophisticated scam

On one level the time-share fraud is familiar — with victims coerced into advancing funds on the promise of a big payday, throwing good money after bad. But where Jalisco’s scam differs from Nigerian princes, or inheritances from long-lost relatives, is in the backstory.

The cartel has established fake websites for U.S. lawyers and brokers, and provides official-looking forms and contracts. And once the victim has clued in, there are even follow-up calls from purported investigators, offering to help recover the funds.

Guillermo Cruz — a Toronto lawyer, licensed to practise in both Ontario and Mexico — receives five to 10 calls a month from time-share scam victims, looking to recover their lost payments.

“The number of cases is growing,” he said.

A man seated at a desk holds up a sheaf of photocopied paper. — Toronto lawyer Guillermo Cruz holds up a copy of a document provided by a time-share fraud victim. Cruz says his office averages five to 10 calls a month from people who have fallen for the cartel’s bogus offer to buy time-shares. (Albert Leung/CBC)

The documentation provided by the cartel can appear convincing, says Cruz.

“I think that it is quite sophisticated. Unless you have a background in Mexican law and you’re familiar with time-share law in Mexico it’s very likely that you would believe that information that has been provided is accurate,” he said.

Pratt shared more than 60 pages of documentation with CBC News, detailing the purported purchase and rental offers he received. They list a half-dozen different corporate entities in Mexico, and several supposed brokers and lawyers in the United States, along with names, signatures, addresses and phone numbers.

Several of the companies appear in an online database of information gathered from other time-share frauds. Websites are still active for at least two of the firms.

A lawyer who claimed to practise in New York City, with offices in a ritzy Manhattan skyscraper, doesn’t appear in state licensing records. (Although there are three legitimate lawyers with the same name in the United States, none of them deal with real estate or Mexican time-shares.)

A man on a beach leans back against a tree. — Pratt relaxes on the beach in Nuevo Vallarta, Mexico. He says he lost close to $200,000 to fraudulent offers to buy his time-share. (Submitted by Diana Paquette)

A purported El Paso real estate broker claims to be operating out of a historic downtown building that is currently being redeveloped into a hotel.

Cruz leafed through Pratt’s documents and picked out a supposed tax form related to the 2019 offer, which bears the seal of a previous Mexican administration; a small but significant red flag.

Cruz says the U.S. and Canadian governments need to put more pressure on Mexican authorities to crack down on the frauds, and create easier ways for time-share owners to validate whether offers are legitimate.

If such measures arrive, they will already be too late for Rod Pratt and Diana Paquette.

The couple have been busy packing up their Edmonton home, preparing to move and heading for a divorce.

“All I was really trying to do was get some money back for my wife and for my life,” Pratt said, tearing up.

“I would gladly trade the trips to Mexico for a life back,” he said. “I wish we would have never went to Mexico.”

Jonathon Gatehouse can be contacted via email at jonathon.gatehouse@cbc.ca, or reached via the CBC’s digitally encrypted Securedrop system at https://www.cbc.ca/securedrop/

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Canada News

That offer to buy your time-share could be from a Mexican drug cartel

Ultra-violent history

Sophisticated scam

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