Drone shows smoke over Puerto Vallarta after ‘El Mencho’ death
Drone footage shows Mexico’s Perto Vallarta going up in smoke after cartel leader El Mencho was killed.
In recent years, travelers looking online for vacations in the Puerto Vallarta area may have come across Covai Gardens, a 22-room resort with a private beach and four pools facing the Pacific Ocean.
But federal authorities allege that the Mexican seaside destination was part of a fraudulent timeshare network benefiting the Jalisco Nueva Generación cartel. Nueva Heneración leader Nemesio Rubén Osequera Cervantes, better known as El Mencho, was shot and killed near Guadalajara on February 22 as part of a Mexican military operation.
In addition to Kovai Gardens, the U.S. Treasury Department’s Office of Foreign Assets Control has imposed sanctions against five Mexican nationals and 17 Mexican companies connected to the network. Officials say the network often targets vulnerable older Americans.
Many of the sanctioned individuals and entities are based in or near Puerto Vallarta, according to a Treasury Department news release announcing the sanctions. Puerto Vallarta is a popular tourist destination that serves as a strategic base for violent cartels, which the U.S. State Department last year designated as a foreign terrorist organization for its role in international drug trafficking.
Those sanctioned include resort founder Carlos Humberto Rivera Miramontes and his network of 13 companies, as well as several call center workers who allegedly helped carry out the timeshare fraud, according to the announcement.
According to the Office of Foreign Assets Control, the sanctions mean that Covey Gardens assets owned by Americans are effectively frozen. U.S. owners of Covey Gardens properties are required to report their interests to authorities and are prohibited from engaging in transactions involving these properties, while U.S. persons in general are further prohibited from renting or purchasing resort properties while the sanctions are in effect.
Violations are subject to civil and, in some cases, criminal penalties.
USA Today’s calls to the resort have been repeatedly hung up, and the resort’s website shows reservations are not available until January 2028, the furthest future date on the reservation calendar. This resort is also unavailable on travel sites that continue to appear.
Federal officials said the sanctions show that the cartel’s illicit revenue streams extend beyond drug trafficking and generate revenue for the organization through activities such as timeshare fraud and fuel theft.
“Terrorist drug cartels like CJNG consistently sacrifice Americans for profit,” Treasury Secretary Scott Bessent said in a statement.
For decades, Mexican cartels have targeted American victims out of hundreds of millions of dollars in timeshare scams through call centers staffed by English-speaking telemarketers, Treasury officials said. Increased efforts by U.S. authorities have resulted in an increase in awareness and reporting of suspicious activity by U.S. financial institutions.
The CJNG cartel took control of a timeshare fraud scheme in the Puerto Vallarta area around 2012. The Ministry of Finance stated: They commit frauds that sometimes span years, leaving their victims with “financial and emotional devastation.”
According to the bureau, timeshare owners were exposed to various scams from the moment they signed their contracts.
The alleged scam took place at Covay Gardens, northwest of Puerto Vallarta in the Mexican state of Nayarit. The agency said robocalls lured prospective buyers to presentations that included deceptive sales tactics, while systematically overcharging their credit cards. The customer database was shared with boiler room operations that carried out timeshare resale, rerental, or investment fraud, and victims were required to pay upfront fees and taxes, which were never paid, before receiving the funds that were supposedly due, the agency said.
According to the Treasury Department, re-victimization schemes often took the form of fraudsters posing as lawyers who paid an advance fee to help victims recover lost funds, or pretended to be government officials demanding fines for engaging in suspicious transactions.
“This vertically integrated timeshare fraud model allows CJNG to efficiently and repeatedly victimize Covey Gardens timeshare owners, who are often American citizens,” the Treasury Department said.
Approximately 6,000 Americans reported losing nearly $300 million from 2019 to 2023 due to timeshare fraud in Mexico, according to a release from the Treasury Department. The report said the majority of fraud goes unreported due to victim embarrassment or other reasons, and losses are likely to be underestimated.
In 2024, USA Today reported that cartels had taken over much of the timeshare market in Cancun, in addition to Puerto Vallarta.
Authorities said CJNG’s timeshare fraud operations in Nayarit state are controlled by operatives on behalf of the cartel’s regional commander, Audias Flores Silva. The State Department is offering $5 million for information leading to his arrest and conviction.
The cartel controls the states of Colima and Michoacán, as well as much of Guadalajara and the suburbs of Jalisco, rivaling the notorious Sinaloa cartel run by Joaquín “El Chapo” Guzmán, who is serving a life sentence.
Reporter Greta Cross contributed to this article.
