From the United States to Mexico. From the local police in Zapopan – a municipality east of Guadalajara – to the Treasury Department of the largest economy in the world. The case of seven young people who were disappeared in the Mexican state of Jalisco and later murdered has shed light on an an international scam that allegedly involves the Jalisco Nueva Generación cartel (CJNG) –a powerful criminal organization whose main activity is the trafficking of fentanyl and other drugs into the United States. A network of companies exposed by the US authorities reveals the ability of organized crime to increase its sources of income, thanks to a diverse array of illicit companies.
On April 27, the US Department of the Treasury exposed a network of companies connected to the CJNG, but which were engaged in businesses more subtle than drug trafficking. One of these firms – a Puerto Vallarta-based cell of the criminal group – had specialized in stealing the savings of retired Americans, by making them believe they were buying or renting a vacation home on the coveted beaches of Mexico. The authorities have not been able to confirm whether the seven disappeared young people were participants in this illegal activity, but they’ve been leaving small clues as the investigation unfolds. The relatives of the victims, meanwhile, have denounced the “criminalization” of their murdered loved ones.
Through a statement, the US authorities announced sanctions against seven individuals and 19 companies connected to the Mexican cartel. Brian Nelson – undersecretary of Financial Intelligence at the Department of the Treasury – has highlighted the importance of this activity for the financing of the CJNG cartel in Puerto Vallarta: “CJNG’s deep involvement in timeshare fraud in the Puerto Vallarta area and elsewhere – which often targets elderly U.S. citizens and can defraud victims of their life savings – is an important revenue stream, supporting the group’s overall criminal enterprise.”
Eduardo Pardo Espino – a 45-year-old Mexican citizen – is identified as the head of this plot. He has been punished by the US government, along with the six other individuals who were allegedly under his command. The objective of these sanctions is to block the assets and interests that these designated persons have in the United States. The companies that have made payments to members of the CJNG or have connections to the cartel are located in Cancun, Guadalajara, Nayarit and Puerto Vallarta. These shell companies – such as Besthings, DantWoo Administrative Services or Promotora Vallarta One – were in the name of the different parties involved. They served as a cover for illicit activities, as well as a connection between leaders of the criminal group.
The favorite victims of this scheme were “elderly American citizens,” according to a recent report by the US Treasury. “U.S. citizens should exercise caution when considering time-share investments or purchasing real estate,” warns a notice by the US Embassy in Mexico, posted in May of 2023. The procedure is always the same: first, the intermediaries claim to have sellers ready. Later, the scammers ask the buyers to advance some money that is needed to pay supposed fees or taxes. Once they have the money in their accounts, the scammers disappear.
The methods and techniques these criminals use to bring their scam to life go a long way. Some scammers, the embassy notice says, design squeaky-clean websites that imitate real American companies, but are filled with false information, such as where the company is located or the names of the owners. In other cases, scammers present false documents to the authorities and even register with the Better Business Bureau under false names. And the story doesn’t end when the scammers are discovered. The authorities have come to detect that, when the scammed person stops trusting the scammer, the criminal will then pose as a representative of the Mexican government or a Mexican financial institution. They will subsequently ask for a fee to help the victim recover the lost funds… and then disappear after they receive it.
Carlos Antonio Flores – a researcher at the Center for Research and Higher Studies in Social Anthropology (Ciesas) and a specialist in organized crime – took the recent news and the US Treasury report with some surprise. “I [didn’t think] that the cartel was engaged in this type of business, because the benefits that can be obtained are not comparable to others, such as drug trafficking or huachicoleo,” Flores admits. Drug trafficking and fuel theft are criminal activities more often associated with an organization as large as the CJNG, as they offer more lucrative returns. “If the information is true, it would mean that the cartel is diversifying its activities.”
The center of this operation is in Puerto Vallarta, the most relevant tourist enclave on the coast of Jalisco. The Insight Crime organization says this is just “the tip of the iceberg” of the CJNG’s involvement in the city’s tourism sector, “which has been a gold mine for the group for years.” The criminal group takes advantage of the real estate development and demand generated by tourism to launder money, creating a network of construction companies and restaurants that they then use to channel dirty money. Insight Crime also warns that “the effectiveness of international sanctions – such as the seizure of property by local authorities – is questionable.” While US sanctions will have little impact on these criminal operations, they will, on the other hand, “make it very difficult for [criminal] companies to access the US banking system.”
Ryan Donner – a real estate agent and lawyer based in Puerto Vallarta – told US media that his firm has seen two similar cases of fraud in recent years. “It’s not very frequent, but yes, we’ve had it happen,” he acknowledges. Donner was able to help both people avoid being scammed, but this isn’t always the case. He explains that the scammers send along false contracts and official-looking documents from the Mexican government, in which non-existent taxes are claimed. “They have contracts [and] documents that appear to be official… it would be very easy to fall into the trap of paying them,” he notes.
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