U.S. Department of the Treasury Office of Public Affairs Treasury Sanctions CJNG-Run Timeshare Fraud Network

 

 

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.”

TIMESHARE FRAUD TYPOLOGY

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.

SANCTIONED COMPANIES

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.

PREVIOUS ACTIONS AGAINST 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.

TIMESHARE FRAUD RESOURCES

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.

SANCTIONS IMPLICATIONS

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.

###
 

Attorney General Bailey Obtains Consent Judgment In Timeshare Exit Case

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

  1. For consumers who want to get out of the timeshare contract, they should reach out to the timeshare directly to see if they offer a deed-back or exit program.  If a program is not available, consult with an attorney for further legal advice.
  2. Beware of making upfront payments to timeshare exit companies for the work they promise.
  3. Written guarantees from timeshare exit companies may not offer the protection or promises that consumers expect.
  4. Do your research.  Research the owners and the business carefully before paying any money.
  5. Check with the Attorney General’s office and BBB for complaints prior to doing any business with a timeshare exit company.
  6. If you believe you have been scammed, you can contact the Missouri Attorney General’s office Consumer Protection hotline at 800-392-8222 or visit their website at www.ago.mo.gov

General Timeshare Tips

  • Look on the secondary market first. If you are interested in buying a timeshare, you may save thousands buying on the resale market. Be fully aware of what you are purchasing and from whom you are buying to ensure a smooth transaction. Make sure you have in writing the terms of the sale and what each side is responsible for paying at closing. Read the contract carefully and ask questions of the seller.
  • Don’t bow to pressure. Take time to think about your decision. Ask the salesperson to send you written information about your possible purchase, including a contract that you can review. There is nothing that says you have to sign the first thing that is shown to you. Let the deal breathe before you figure out if it is right for you.
  • Do your research. Compare travel savings with online travel services or local travel agents. Also, check out the company with the Attorney General’s office and the BBB.
  • Act fast if you are not satisfied. If you sign a contract for a timeshare or travel club, you have a short window to cancel the contract if you don’t like what you purchased. Don’t wait until after you get back from your trip to take a second look at the contract and research the company you are dealing with or it may be too late. Also, always pay with a credit card so you can challenge the charge should something go wrong with the purchase.