Mexican cartels turn to timeshare fraud, target Americans with fake offers

Your timeshare in Mexico may actually be helping prop up that country’s violent drug cartels, the U.S. government said Wednesday, warning Americans to think twice before buying south of the border.

Treasury and State department officials said cartels have stolen lists of American timeshare owners and are using call centers to offer sales or rental services, charging fees up front. Americans pay, but the services are never delivered, with the money ending up funding the cartels themselves.

It’s the latest in diversification for the cartels, whose core drug business has in recent years been heavily supplemented by migrant smuggling and oil theft.

The FBI collected nearly 900 complaints of Mexico timeshare fraud last year, totaling more than $50 million — and authorities said the real total is probably much higher, because most victims don’t report it.

U.S. officials announced sanctions on four people and 13 firms connected to the Jalisco New Generation Cartel, or CJNG, which they said has become particularly prolific at the timeshare scam.

“These cartels continue to create new ways to generate revenue to fuel their terrorist operations,” said Treasury Secretary Scott Bessent. “At President Trump’s direction, 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.”

The sanctions are the latest in the Trump administration’s intensifying effort to defang the cartels — and CJNG in particular.

In May, the government slapped sanctions on figures and companies accused of helping CJNG’s oil theft operations, which include diverting crude from sources in Mexico then smuggling it to importers in the U.S., who disperse it into the American economy.

Fuel theft has become the second-largest source of income, following drugs, U.S. officials said.

Migrant smuggling had been earning the cartels billions of dollars a year under the Biden administration, but the unprecedented plunge in border activity has sapped that source of money, experts said.

For the timeshare fraud, authorities said CJNG took over the market around Puerto Vallarta, on Mexico’s west coast. It likely paid unscrupulous timeshare operators for lists of American owners, then used call centers with fluent English speakers to pose as U.S.-based operations looking to do business.

They offer chances to sell off or handle the renting of a timeshare.

“If an unsolicited purchase or rental offer seems too good to be true, it probably is. Those considering the purchase of a timeshare in Mexico should conduct appropriate due diligence,” the Treasury Department said.

The cartels are viewed as a growing threat on both sides of the border.

They’ve long been seen as potential near-peer adversaries to the Mexican government, deploying well-armed private armies capable of out-matching local authorities and sometimes going head-to-head with the military.

In the U.S., authorities warn of worsening entanglements with cartel-linked figures arrested deep inside the U.S. Federal agents in June busted a nightclub in South Carolina that officials said was linked to Cartel de Noreste.

CDN, CJNG and four other cartels have been listed as terrorist organizations by the U.S.

The New York Times reported last week that Mr. Trump signed a secret order directing the use of military force against the cartels both at sea and, potentially, on foreign soil.

Mexican President Claudia Sheinbaum said she was told such a move was in the works, but insisted she would not allow U.S. troops to operate inside her country.

Mexico has been celebrating its levels of cooperation with the U.S. From February to the end of July, it reported making 5,821 cartel-related arrests, seizing nearly 4,700 firearms and 755,000 rounds of ammunition and dismantling several drug labs.

Mexico on Tuesday also extradited more than two dozen cartel figures to the U.S. to face criminal cases.

The U.S. agreed not to seek the death penalty against them, clearing the way for Mexico to send them.

Experts say the cartels’ income soared during the Biden administration, when drugs and immigrants came illegally across the border. Cartels charge migrants a “piso” or tax for using their smuggling routes.

Some experts said the migrant money may have outstripped drug profits at some points during the previous U.S. administration. That has largely dried up, with illegal border crossings at an all-time low.

But the cartels have diversified their income sources.

This month, the Treasury Department froze assets of El Makabelico, a “narco-rapper” who dedicated half of his music streaming revenue to CDN.

Three of the individuals sanctioned under the timeshare fraud scheme Wednesday are senior CJNG figures: Julio Cesar Montero Pinzon, Carlos Andres Rivera Valera and Francisco Javier Gudino Haro. They have each been sanctioned before.

The fourth is Michael Ibarra Diaz Jr., whom the U.S. said portrays as a legitimate businessman involved in the Puerto Vallarta timeshare market, but in fact is working on behalf of CJNG. His network of 13 companies was also sanctioned, including a travel agency, tour operators and real estate firms.

Correction: This article has been updated to correct the name of the cartel that has been linked to narco-rapper El Makabelico as well as to correct the rapper’s name.