Federal prosecutors secured an indictment against a figure from Mexico’s Jalisco New Generation Cartel, charging him with running a massive timeshare fraud that duped Americans into paying the cartel to have their shares sold or rented — then never delivering on the service.
Authorities said the scam was started by people not associated with the cartel. But in 2012, Julio Cesar Montero Pinzon, a senior figure with CJNG, moved to take control of the operation in the Puerto Vallarta area. They also indicted his half-sister.
Prosecutors said they used cartel-control call centers to run scams within scams.
Not only would they dupe people into paying for sales or rental services that they never delivered, but they would also have someone call up from a law firm offering their services to help get money back. In some cases, they would even say a settlement had been reached and the money was ready to be released — in exchange for another advance payment.
Alternatively, they would have someone call claiming to be from the government and offer to help get their money back, but only with an advance payment.
Justice Department officials said the money went to fund operations of CJNG, which this year was designated a foreign terrorist organization by the U.S. government.
Joseph Nocella Jr., the U.S. attorney for the Eastern District of New York, where the indictment was handed up, said the scheme snared thousands of American timeshare owners.
“CJNG funds its criminal terrorist operations using multiple tactics, from trafficking dangerous narcotics to executing complex fraud schemes, and our office will continue to use all available tools and resources to protect American investors and the public at large, and bring to justice those who provide support to the cartel,” Mr. Nocella said.
The indictment describes a sophisticated business with people identifying timeshare owners, running the call centers that made contact, maintaining fake websites and bogus contract documents, and laundering the money through contadores, or accountants, who received the money, and through pagadores, or paymasters, who held the bank accounts.
The scam operated in conjunction with a hotel chain, unnamed in the indictment, that had hotels in many of the popular tourist locations of Mexico.
CJNG’s involvement in timeshare fraud was first revealed this past summer when the Treasury Department slapped sanctions on cartel figures and firms it said helped run the scams.
Officials said the scammers likely paid unscrupulous timeshare operators for their lists of American owners.
The Justice Department said 6,000 Americans reported getting scammed by timeshare fraud from 2019 to 2024, totaling about $350 million in losses.
Authorities figure that undersells the actual problem since many people don’t report being victimized.
In one case detailed in the indictment, a timeshare owner was duped into sending $76,000 to one bank and $295,053.50 to another bank. Authorities then traced transfers of the money that ended up in accounts associated with Mr. Montero Pinzon or his half-sister, Griselda Margarita Arredondo Pinzon.
They both have been charged with conspiracy to commit wire fraud and conspiracy to commit money laundering. Mr. Montero Pinzon has also been charged with providing material support to a terrorist organization and conspiracy to provide material support.
Christopher G. Raia, the assistant director in charge of the FBI’s New York Field Office, said timeshare fraud is part of an “evolution” in cartel finances.
Oil theft has become the cartels’ second biggest source of revenue, trailing only its illegal drug proceeds, government officials say.
And earlier this year, U.S. officials sanctioned a “narco-rapper” they said dedicated half of the revenue from his online streaming profits to the Cartel del Noreste.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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