The Excerpt podcast: Mexican cartels are using timeshares trapping thousands of Americans

On a special episode of The Excerpt podcast: When you think about Mexican drug cartels, the things that are likely to come to mind are drug trafficking, gun battles and assassinations. But add this one to your list: timeshares. Over the past decade, thousands of Americans have fallen prey to a complex real estate scheme involving one of the most violent organizations in Mexico. Cartels, it seems, are finally branching out. Freelance reporter Steve Fisher joins The Excerpt to discuss more about this more lucrative new business venture and how you can spot their scam.

Hit play on the player below to hear the podcast and follow along with the transcript beneath it.  This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.

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Dana Taylor:

Hello and welcome to The Excerpt. I'm Dana Taylor. Today is Wednesday, March 13th, 2024, and this is a special episode of The Excerpt.

When you think about Mexican cartels, the things that are likely to come to mind are drug trafficking, gun battles and assassinations. But add this one to your list, timeshares. Over the past decade, thousands of Americans have fallen prey to complex real estate scheme involving one of the most violent organizations in Mexico. Cartels, it seems have branched out.

Why and how can you spot their scam? Here to talk more about this more lucrative new business venture is investigative reporter, Steve Fisher, specialty USA Today. Steve, thanks for joining me.

Steve Fisher:

Thanks for having me, Dana.

Dana Taylor:

First, tell me a little bit about this new moneymaking scheme involving timeshares. How does it work?

Steve Fisher:

This scam basically works in which the cartel, the Jalisco Cartel as it's known in Mexico, has a number of call centers with telemarketers who call American citizens. And these American citizens, of course, own timeshares in popular destinations like Puerto Vallarta, Cancún, Acapulco.

They tell them that they have a buyer for their timeshare, and often the price the buyer is willing to pay is greater than what these individuals have paid for their timeshare so this is an exciting possibility for them. Telemarketer then says, "Well, if you're interested, then first there is some fees you're going to have to pay, including a Mexican federal tax." Sometimes it's a capital gain fee. And it goes on and on and on, and they keep Americans on the hook trying to get as much money from them as possible.

Dana Taylor:

US government officials are saying that cartels are now making just as much money through timeshare cons as they do in drug trafficking. How much are we talking about?

Steve Fisher:

According to US government officials that I spoke to, we're talking about hundreds of millions of dollars every single year.

Dana Taylor:

What do you think made the cartels make such a big pivot? How did this even get started?

Steve Fisher:

It started in the 1990s with expats from the United States who lived in Mexico and with fugitives of US law who lived in Mexico. And they began on there creating these call centers or doing it individually, scamming Americans in a very similar way.

What happened and what changed was in 2010, an individual who was a part of this telemarketing scheme had contacts with the Jalisco Cartel. And this individual went to them and said, "Look, I can help you take over this entire business or scam, and you can make a lot of money with timeshares out of Puerto Vallarta."

The Jalisco Cartel was interested. And being a cartel that is very agile, said, "Absolutely." And they took over call center after call center, forcing these individuals to work for them. And not only do that, but teach them how to do this and how to do it better and better.

And since 2010, the Jalisco Cartel has primarily had control not only in places like Puerto Vallarta, but also in other cities. They've been expanding to cities like Cancún, where they don't have entire control government officials tell me, but they are working on taking it over, so they're constantly expanding.

Dana Taylor:

Yeah. I wanted to ask you about that expansion you wrote that the Jalisco New Generation Cartel has continued to expand its fraud business. How sophisticated is this new network and how quickly is the business expanding?

Steve Fisher:

It's shockingly sophisticated. I mean, we're talking about individuals, they hire people who speaks perfect English in these call centers and they provide what appear to be very legitimate documents. And these scams can develop incredible ways. First, as I mentioned, it can start out with these fees that are required by say the Mexican government, capital gains fees. All of this is in the tens of thousands often, and it just keeps going, but you can have your money as soon as you pay. And that is what keeps them on the hook.

But then if individuals catch on, let's say American citizens realize they're being scammed, the Jalisco Cartel will drop off for a little while, say a few months, maybe even six months. And then they'll come back and say they are Mexican government officials who have raided a call center and realize that these American citizens are being scammed. They found their information, say in a database. And said, "We are here to help you get out of this scam, and we're here to help you get your money back."

Which at this point could be a lot of money. It could be tens of thousands, it could be sometimes hundreds of thousands of dollars for Americans. And the Americans are thrilled. They're like, "Finally, someone's here to help." And then the call center telemarketers posing as Mexican officials say, "We're definitely going to help you, but there'll just be a few fees before we can help you out." And thus goes this scheme that continues in a myriad of ways from there and continues to defraud Americans of millions of dollars.

Dana Taylor:

Let's talk about the victims a little bit more. A scam is usually only really successful in the beginning before everyone knows what the big play is and starts warning their social networks. But you wrote that their business model is constantly evolving. How so? And who's helping to make these scams so successful?

Steve Fisher:

The business model is evolving in that they are getting better and better at evading Mexican and US government officials. They will use shell companies that, as soon as they are found out, they flip and switch and create new shell companies. They could use one shell company for maybe six months. Usually that's the maximum amount of time they'll use it and they're onto the next.

As US government officials told me, it's like a cat and mouse game. It's almost impossible to catch them and they're getting better and expanding beyond. They have more than two dozen call centers across the country now. And in this way they're constantly making more money. And you could say perhaps a sustainable scam is that there's a lot of shame to admitting that you have been scammed and duped.

And so, there are fewer reports to US government entities to denounce these scams, perhaps because of that. Many of the people I spoke to don't even want their family members to know that they have done this. In that way, it emboldens and empowers the Jalisco Cartel to grow and do that much more and continue to scam people sometimes for years.

Dana Taylor:

And who are the cartels primarily targeting here? Are they going after other nationalities besides Americans?

Steve Fisher:

They are targeting Canadians as well. North Americans primarily. But it seems that vast majority of them are American citizens. And I should mention they acquire these databases of timeshare data, including the names of individuals, their age, how much they paid for the timeshare, a lot of information. And then they go and they target primarily senior citizens.

And US government officials told me they really target individuals who they think might have dementia, who can forget they've spoken to these people and months later pay the same amount. Again, very sophisticated and primarily elderly people who might be more susceptible to this type of scam.

Dana Taylor:

Steve, with these timeshare scams specifically, the cartels are dealing with US citizens directly. How is this different and perhaps more dangerous for Americans than their drug trafficking activities?

Steve Fisher:

Well, it's different because the Jalisco Cartel is reaching into the living rooms of Americans, an American senior citizens, some of the most vulnerable in our society in the United States. And in this way they have direct access to thousands and thousands of Americans who might have the difficulty looking out for themselves, defending themselves.

And they often threaten these Americans, sometimes threatening that the Mexican government is going to come to their home and arrest them. And so they have information, very sensitive information of American senior citizens. They have everything to identify where they live, what they do for a job, how much money they have, their ownership of property in Mexico. It's another level and an unprecedented level of access that this cartel now has to Americans.

Dana Taylor:

You say that US officials are aware of this new scam by the cartels. What are they doing to stop it? And are Mexican authorities helping?

Steve Fisher:

US officials are constantly trying to shut down the shell companies that the Jalisco Cartel has, and they're trying to follow the money. They're following the money often to these Mexican banks, going back and identifying the leaders of this scam, the managers of these call centers and telemarketers. They have already sanctioned 40 companies in Mexico.

The Treasury Department has sanctioned these companies, saying they're related and associated with this scam and the Jalisco Cartel. But it's again, a really difficult and challenging game because the Jalisco Cartel is just one step ahead constantly with just innovating and finding new ways to avoid US officials.

In Mexico, little seems to be done. I was told that Mexican banks could do much more to flag these suspect payments that are made to these accounts, to these fraudulent shell companies. And in Mexico, there seems to be little motivation to put significant resources towards stopping this scamming of American citizens.

Dana Taylor:

Let's talk about how people can identify these scams before they really start. What are the telltale signs people should look for?

Steve Fisher:

Well, first of all, if someone is calling you and saying, "You need to pay me money before I will give you money," that I think is a big red flag for anyone. The other thing is the cartel has sophisticated and very sleek websites, but often the names of those individuals that they say are lawyers and other officials or individuals don't check out if you do a bit of research. But first and foremost, someone calling you and telling you something that seems a little too good to be true, and then saying, "You need to pay all of these fees before you get money," should be a red flag.

Dana Taylor:

Steve, you've described an intricate web that people are getting ensnared in. What do you recommend people do if they think they're already in the middle of a scam?

Steve Fisher:

Individuals should report what they experienced and what they heard from these people. Even if they're being scammed in that moment, they should report it to the FBI. The FBI is the one, is the institution responsible for investigating these cases in the United States. And there's a form called the IC3 form where you can report this type of scam. And the FBI is working hard to follow up reports that individuals make to them related to the Jalisco Cartel and this telemarketing scam.

Dana Taylor:

Steve, thank you for being on The Excerpt.

Steve Fisher:

Thanks so much for having me.

Dana Taylor:

Thanks to our senior producer, Shannon Rae Green and Bradley Glanzrock, for their production assistance. Our executive producer is Laura Beatty. Let us know what you think of this episode by sending a note to podcast@usatoday.com. Thanks for listening. I'm Dana Taylor. Taylor Wilson will be back tomorrow morning with another episode of The Excerpt.

This article originally appeared on USA TODAY: The Excerpt podcast: Mexican cartels' timeshares scams trap Americans