Diamond resort, which was acquired by Hilton Grand Vacations, won a landmarking rule in federal district court in their lawsuit against third-party exit companies.
Action Coordinated with Government of Mexico
This action by the US Government should serve as a reminder that consumers should never: 1) trust an unsolicited caller who offers to help sell your timeshare and 2) never wire or send money to a third party to pay for closing costs to sell your timeshare.
WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned eight Mexican companies linked to timeshare fraud on behalf of the Cartel de Jalisco Nueva Generacion (CJNG). CJNG is a violent Mexico-based organization that traffics a significant proportion of the illicit fentanyl and other deadly drugs that enter the United States. Today’s action is the result of a collaboration between the United States and the Government of Mexico.
“As CJNG has consolidated territory over the past decade, it has added other crimes to its core activity of drug trafficking,” said OFAC Director Andrea M. Gacki. “In tourist destinations such as Puerto Vallarta, CJNG has become heavily engaged in timeshare fraud, which often targets U.S. citizens. This crime, which can defraud victims of their life savings, results in another significant revenue stream for the cartel and strengthens its overall criminal enterprise. Today’s action exposes this CJNG scheme and also serves as a warning to potential victims, many of whom are elderly.”
Although there are different types of timeshare fraud, the schemes often involve the following: (1) third-party scammers, who claim to have ready buyers, make unsolicited purchase offers to timeshare owners; (2) if offers are accepted, scammers make requests of timeshare owners for payments of advance fees and taxes, supposedly to facilitate or expedite the sale with assurances of reimbursement upon closing; and (3) once multiple payments have been made to the scammers, timeshare owners eventually realize that the offers were fictitious, that there are no buyers, and that their money is gone.
The eight companies designated today, which are linked directly or indirectly to CJNG’s timeshare fraud activities, claim to be financial services or real estate companies. Five of the companies—Servicios Administrativos Fordtwoo, S.A. de C.V., Integracion Badeva, S.A. de C.V., JM Providers Office, S.A. de C.V., Promotora Vallarta One, S.A. de C.V., and Recservi, S.A. de C.V.—are based in or near Puerto Vallarta, Jalisco, Mexico. Servicios Administrativos Fordtwoo, S.A. de C.V. has also made direct payments to CJNG members.
Puerto Vallarta is a CJNG strategic stronghold for drug trafficking and various other illicit activities. OFAC has taken multiple actions against CJNG actors in Puerto Vallarta, including those who have ties to nightclubs, bars, and restaurants. Additionally, OFAC has designated senior CJNG members Carlos Andres Rivera Varela (a.k.a. “La Firma”), Francisco Javier Gudino Haro (a.k.a. “La Gallina”), and Julio Cesar Montero Pinzon (a.k.a. “El Tarjetas”), who are part of a CJNG enforcement group based in Puerto Vallarta that orchestrates assassinations of rivals and politicians using high-powered weaponry.
The remaining companies designated today—Corporativo Title I, S.A. de C.V., Corporativo TS Business Inc, S.A. de C.V., and TS Business Corporativo, S.A. de C.V.—are based in Guadalajara, Jalisco, Mexico.
These eight companies are being designated pursuant to Executive Order (E.O.) 14059 for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, a person sanctioned pursuant to E.O. 14059, namely, CJNG.
On April 8, 2015, OFAC sanctioned CJNG pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act) for playing a significant role in international narcotics trafficking. On December 15, 2021, OFAC also designated CJNG pursuant to E.O. 14059. In other actions, OFAC has designated numerous CJNG-linked companies that were engaged in various commercial activities and multiple individuals who played critical roles in CJNG’s drug trafficking, money laundering, and corruption.
In 2020, the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission issued a joint warning to consumers concerning fraudsters targeting owners of timeshares in Mexico. Individuals who have been victimized by this type of scam are encouraged to file a complaint with the FBI’s Internet Crime Complaint Center by visiting https://www.ic3.gov.
At times, perpetrators of timeshare fraud misuse government agency names in attempts to appear legitimate. For example, perpetrators may call victims and claim to represent OFAC, demanding a payment in exchange for the release of funds that the perpetrator claims OFAC has “blocked.” Today, OFAC is also issuing an alert regarding such scams, warning that individuals may falsely claim to represent OFAC in furtherance of their fraud.
Click here to read the OFAC Alert.
As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. U.S. persons may face civil or criminal penalties for violations of E.O. 14059 and the Kingpin Act.
Today’s action is part of a whole-of-government effort to counter the global threat posed by the trafficking of illicit drugs into the United States that is causing the deaths of tens of thousands of Americans annually, as well as countless more non-fatal overdoses. OFAC, in coordination with its U.S. Government partners and foreign counterparts, will continue to target and pursue accountability for foreign illicit drug actors.
The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons List (SDN List), but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.
For more information on the entities designated today, click here.
To view a chart on the entities designated today, click here.
JEFFERSON CITY, Mo.- In a major win for consumers, Attorney General Andrew Bailey announced today that his Office has obtained a consent judgment against Vacation Consulting Services, LLC; VCS Communications, LLC; The Transfer Group, LLC; Real Travel, LLC; and their owner Brian Scroggs for failing to let consumers out of their timeshare agreements. Scroggs owned Vacation Consulting Services, a Missouri-based company that offered timeshare exit services around the country.
“One of my biggest priorities as Attorney General is to enforce the law as written, and that involves holding fraudulent companies accountable for preying on Missourians,” said Attorney General Bailey. “This consent judgement is a testament to the work that this office’s Consumer Protection Unit puts in everyday to protect Missourians, and we will continue to use every legal resource available to pursue justice for victims of consumer fraud.”
The State filed a Petition against the Defendants in July 2020 for violations of the Missouri Merchandising Practices Act. After more than two years of hard-fought litigation, Defendants agreed to settle the case for $800,000. This figure includes $700,000 in restitution for consumers, $50,000 in civil penalties, and $50,000 to the Missouri Practices Revolving Fund, which will help pay for the State to pursue other future actions on behalf of defrauded consumers.
The Judgment permanently enjoins Scroggs and the other Defendants from marketing or selling third party timeshare exit services in the State of Missouri.
While the consent judgment sets the restitution amount, Scroggs has filed for bankruptcy protection. The Attorney General’s Office continues to pursue Scroggs in bankruptcy court in order to attempt to recover as much as legally possible for consumers.
The consent judgment can be read here: https://ago.mo.gov/docs/default-source/press-releases/2023-01-06-consent-judgment(13807993-2).pdf?sfvrsn=207a25e6_2
Attorney General Bailey encourages Missourians who believe they may be the victim of any scam or unfair practice to file a complaint by calling the Attorney General’s Consumer Protection hotline at 800-392-8222, or by submitting a complaint online at ago.mo.gov.
Timeshare Exit Tips
General Timeshare Tips
ARDA, the trade association representing the timeshare industry, has teamed up with Lisa Ann Schreier, a/k/a The Timeshare Crusader, to put together this list of important information about exiting a timeshare contract.
Education is key
As an owner, you need to know how to use your timeshare, the costs associated with your timeshare, and your options if you ever decide that ownership no longer meets your vacation needs.
“The closing/verification process is designed to answer your questions away from a potentially commissioned salesperson,” says Lisa. “Take advantage of that process. Don’t be rushed.
Having answers at the onset of owning may save you resources later.”
If you decide a timeshare is no longer a fit with your lifestyle, then educating yourself on the safe and often free ways to exit is another important step in the education process. “ResponsibleExit.com is a safe and trusted resource that will help with any questions you may have,” says Jason Gamel, President and CEO of American Resort Development Association (ARDA).
The developers on ResponsibleExit.com have support teams trained to help owners understand their options. “By contacting your developer, they can review your account and let you know your best options based upon your individual needs,” says Gamel.
There’s a world of difference between a timeshare that’s paid in full and one with a loan balance.
No Loan balance and current on your maintenance fees
Many timeshare developers offer low-cost or even free exit options to those owners who don’t have a loan balance and are current on their maintenance fees. And often, you don’t even need a reason other than you no longer want to be an owner. The key is calling the developer first, as they might not be able to work with you (for legal reasons) if you have engaged a third party to help.
Loan balance and/or delinquent maintenance fees
In this situation, cancelling your contract becomes a lot more complicated. Not only because you have an outstanding loan, but it is also more difficult if you owe money to the association. The only way to modify your loan or receive any other financial relief is to work directly with your timeshare developer. “No developer or lender is going to cancel a contract just because you suddenly decided you don’t want the timeshare or can’t afford it. Also, claiming, without written proof, that you were promised your maintenance fees would never go up, or that your timeshare would increase in value, are not legitimate reasons either. This is yet another reason why education is vitally important”, says Lisa, The Timeshare Crusader. It’s also worth noting that many scam companies claim they can get you a refund. In a word…not likely.
The truth about self-proclaimed exit companies and exit attorneys.. they’re not the same
For years, companies have come and gone that have promised quick and easy exit options for timeshare owners. Whether it was having a “buyer ready on the other line” to buy your timeshare, or companies who now claim that they can cancel your timeshare contract, companies will do anything to get you to pay for something you may be able to do yourself. If you’re an owner, chances are you’ve already been contacted by one or more of these companies.
“While these companies are quick to use the words “fast, easy and/or simple” and seem to offer a money-back guarantee if they don’t do what they promise, the reality is not quite as rosy,” cautions Lisa.
Here are a few things to keep in mind:
Your options
To summarize, ARDA and The Timeshare Crusader offer this information:
The Justice Department announced the results of its efforts to protect older adults from fraud and exploitation. The department also made substantial efforts to return money to fraud victims and announced that it is expanding its effort to combat scams overseas.
With the recent lawsuit filed by Alaska Attorney General Treg Taylor against seven corporations and eight individuals who are alleged to have operated a fraudulent timeshare exit company, the American Resort Development Association-Resort Owners’ Coalition (ARDA-ROC) today reminded timeshare owners to always talk to their developer first when looking to exit their timeshare.
The Alaska Attorney General filed a lawsuit against an interrelated network of timeshare exit companies, including seven corporations and eight individuals, alleging they defrauded elderly Alaskan consumers. The defendants in the Attorney General’s complaint include Consumer Law Protection, LLC, Consumer Rights Council, Premier Reservations Group, LLC, Resort Transfer Group, LLC, Square One Development Group, Inc., Square One Group, LLC, Timeshare Help Source, Christopher Carroll, George Reed, Louann Reed, Scott Jackson, Eduardo Balderas, Sherrod Banks, Courtney Kirkpatrick, and Gary Adamson.
“Consumers should always be wary of companies that use scare tactics to create a sense of urgency,” said Attorney General Taylor, in a press release from his office on June 28, 2022. “A company that refuses to give you a few days to think over a big financial commitment probably isn’t the kind of company you want to do business with.”
“Continued actions by Attorneys General throughout the United States only emphasize how important it is that consumers remain cautious about engaging with unscrupulous third-party companies who require them to pay thousands in up-front fees and offer guarantees that sound too good to be true,” said Robert Clements, Vice President of Regulatory Affairs and General Counsel for the American Resort Development Association (ARDA). “If you have done business with one of the companies named, we encourage you to reach out to the Alaska Department of Law.”
The Attorney General’s office alleges that the entities solicited timeshare owners to get out of their timeshare contracts based on false claims and promises in exchange for large upfront payments. According to the Alaska Attorney General’s press release, the lawsuit alleges that the defendants:
Nine Alaskan victims, and counting, have been identified by the Department of Law, who paid the defendants a total of over $113,000. There may be additional victims who have not yet been identified.
The Alaskan Attorney General’s office has asked customers nationwide who believe they were defrauded by the companies to fill out a consumer complaint form here or file a complaint through the Department of Law’s Consumer Protection Unit at (907) 269-5200.
“This is exactly why we continue to remind timeshare owners who are looking to exit about the importance of going to their developer, resort management company or HOA first,” said Ken McKelvey, Chairman of the Board for ARDA-ROC. “Through ARDA-ROC, we also offer a safe exit resource, that is supported by timeshare developers, through the Coalition for Responsible Exit.”
ARDA-ROC encourages timeshare owners looking to exit to contact their timeshare developer, resort management company or HOA first. Timeshare developers also support using the Coalition for Responsible Exit as a safe exit resource, which offers free or low-cost exit options and can be accessed by visiting ResponsibleExit.com.