Bahía de Banderas, Nayarit — The United States government said they have fined a Riviera Nayarit timeshare resort for criminal ties. Kovay Gardens along Mexico’s Pacific coast was one of 17 companies linked to timeshare fraud.
Kovay Gardens is located in a private cover in Bahia de Banderas about 10 minutes away from the state’s popular Huanacaxtle Beach.
On Thursday, the U.S. Treasury said Kovay Gardens, a Mexican timeshare resort, along with five Mexican individuals and 17 Mexican companies linked to timeshare fraud schemes are being fined.
Thomas Pigott, Principal Deputy Spokesperson, said those being sanctioned have been linked to timeshare fraud orchestrated by the Cártel de Jalisco Nueva Generación (CJNG).
Last year, the Trump Administration designated CJNG as both a Foreign Terrorist Organization (FTO) and a Specially Designated Global Terrorist (SDGT). The criminal group has been linked to illicit revenue through drug trafficking, fuel theft, extortion, human trafficking and timeshare fraud.
“Thursday’s action was taken pursuant to Executive Order (E.O.) 14059, which targets the proliferation of illicit drugs and their means of production, and E.O. 13224, as amended, which targets terrorists and their supporters,” the Treasury reported.
“The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a timeshare fraud network led by the terrorist Cartel de Jalisco Nueva Generacion (CJNG).
“The action targets Kovay Gardens, a Mexican timeshare resort, as well as five Mexican individuals and 17 Mexican companies associated with the network,” they said in an official press release.
Many of these individuals and entities are based in or near Puerto Vallarta, a popular tourist destination that also serves as a strategic stronghold for CJNG. CJNG is a brutally violent terrorist cartel that continues to diversify its illicit revenue streams beyond drug trafficking, including through timeshare fraud and fuel theft.
These activities generate significant proceeds for the organization at the expense of U.S. citizen victims. Timeshare fraud often targets vulnerable older Americans and can defraud victims of their life savings.
“Whether through trafficking fentanyl into our borders or orchestrating timeshare fraud schemes, terrorist drug cartels like CJNG consistently victimize Americans for profit,” said Secretary of the Treasury Scott Bessent.
“Under President Trump’s leadership, we will continue our efforts to completely eradicate the cartels’ ability to generate revenue and terrorize Americans.”
Timeshare fraud in Mexico has plagued American victims for decades, costing them hundreds of millions of dollars while enriching criminal organizations such as CJNG.
Over the past three years, Treasury Department components, including OFAC and the Financial Crimes Enforcement Network (FinCEN), have undertaken a sustained effort to expose and counter this threat.
These efforts have increased awareness and led to enhanced reporting of suspicious activity by U.S. financial institutions.
In addition to Treasury’s actions, Department of Justice investigations have resulted in recent indictments related to timeshare fraud schemes conducted by CJNG members.
The sanctions, they said, are the result of of a culmination of a coordinated Homeland Security Task Force-New York led investigations involving the Federal Bureau of Investigation, the Drug Enforcement Administration, Internal Revenue Service Criminal Investigation and U.S. Customs and Border Protection.
Additionally, OFAC coordinated on this action with the Government of Mexico’s financial intelligence unit, the Unidad de Inteligencia Financiera (UIF).
For decades, Mexico-based cartels have been targeting U.S. owners of timeshares through call centers in Mexico staffed by telemarketers fluent in English. Beginning in or about 2012, CJNG took control of timeshare fraud schemes in Puerto Vallarta, Jalisco, Mexico, and the surrounding area, known as the Bahia de Banderas.
These complex scams often target older Americans who can lose their life savings. The lifecycle of these scams can last years, resulting in financial and emotional devastation of the victims while enriching cartels like CJNG.
Kovay Gardens is located on the Bahia de Banderas. The cartels generally obtain information about U.S. owners of timeshares in Mexico from complicit insiders at timeshare resorts.
After obtaining information on timeshare owners, the cartels, through their call centers, contact victims by phone or email and claim to be U.S.-based third-party timeshare brokers, attorneys, or sales representatives in the timeshare, travel, real estate, or financial services industries.
The fraud may include timeshare exit scams (a.k.a. timeshare resale scams), timeshare re-rent scams and timeshare investment scams. The common theme is that victims are asked to pay advance “fees” and “taxes” before receiving money supposedly owed to them.
This money never comes and the victims are continuously told to pay additional “fees” and “taxes” to finalize the transactions. Victims are typically told to send the money via international wire transfers to accounts held at Mexican banks and brokerage houses.
Current owners of timeshares in Mexico should be aware: If an unsolicited purchase or rental offer seems too good to be true, it probably is. Those considering the purchase of a timeshare in Mexico should conduct appropriate due diligence.
After these initial scams, re-victimization scams can occur. The scammers may impersonate law firms, claiming that they can initiate proceedings on behalf of the victims to recover lost funds for an upfront fee.
In other instances, scammers impersonate government officials, claiming that victims have engaged in suspicious transactions and demanding “fines” to release their funds or face the risk of imprisonment.
OFAC issued an alert in March 2023 regarding such scams, warning that individuals may falsely claim to represent OFAC in furtherance of their fraud. Treasury’s Financial Crimes Enforcement Network (FinCEN), OFAC, and the FBI previously issued a joint notice on timeshare fraud associated with Mexico-based transnational criminal organizations to provide financial institutions with an overview of these schemes, associated financial typologies, and red flag indicators.
Since the notice was published, FinCEN received over 850 Suspicious Activity Reports that cite the notice. Together, these Suspicious Activity Reports identified approximately $330 million in suspicious activity potentially related to timeshare fraud.
On average, FinCEN receives approximately 40 Suspicious Activity Reports each month associated with possible timeshare fraud, with each reporting an average of $383,000 and median of $42,000 in suspicious activity.
This activity primarily consists of U.S.-based individuals sending funds to suspected scammers in Mexico who potentially work for Mexico-based transnational criminal organizations.
According to the FBI, approximately 6,000 U.S. victims reported losing nearly $300 million between 2019 and 2023 to timeshare fraud schemes in Mexico. In 2024 alone, FBI’s Internet Crime Complaint Center (IC3) received nearly 900 complaints concerning timeshare fraud schemes in Mexico, with reported losses of over $50 million.
By controlling a timeshare resort, CJNG can defraud timeshare owners in various ways from the moment they sign a contract and for years to come. This is the case with the CJNG-controlled Kovay Gardens, a timeshare resort located northwest of Puerto Vallarta in La Cruz de Huanacaxtle, Nayarit.
Kovay Gardens uses underhanded tactics including robocalls, to lure potential buyers to presentations, where it uses deceptive sales practices to entice buyers. For example, Kovay Gardens falsely promises that its timeshare owners can generate income by renting out their unused weeks.
Additionally, Kovay Gardens engages in other scams, such as the systematic overcharging of credit cards. After these initial frauds, Kovay Gardens shares its customer database with CJNG-controlled boiler rooms, or call centers, that conduct timeshare resale, re-rent, and re-victimization frauds described above.
This vertically integrated timeshare fraud model allows CJNG to efficiently and repeatedly victimize Kovay Gardens timeshare owners, who are often U.S. persons. Kovay Gardens is being sanctioned pursuant to E.O. 14059 and pursuant to E.O. 13224, as amended, for being directed by, or having acted or purported to act for or on behalf of, directly or indirectly, CJNG.
Also sanctioned is Administradora y Comercializadora del Mar, S.A. de C.V., which provides a number of services to Kovay Gardens, including the processing of hotel reservations.
CJNG’s timeshare fraud activities at Kovay Gardens are conducted in part through the resort’s founder, Carlos Humberto Rivera Miramontes (Rivera Miramontes). Rivera Miramontes, who has a lengthy history of willingly working with drug traffickers, opened Kovay Gardens over 20 years ago under its original name Vallarta Gardens.
Rivera Miramontes works closely with CJNG-affiliated businessman Michael Ibarra Diaz Jr., who OFAC previously designated, to facilitate timeshare sales to American and Canadian tourists who are subsequently defrauded.
Multiple lawsuits have alleged that Rivera Miramontes and Kovay Gardens have engaged in fraudulent activity. Rivera Miramontes is being sanctioned pursuant to E.O. 14059 and pursuant to E.O. 13224, as amended, for being directed by, or having acted or purported to act for or on behalf of, directly or indirectly, CJNG.
Also sanctioned is Rivera Miramontes’ corporate network which is composed of 13 companies. Two of the companies, Punto 54, S.A. de C.V. and High Land Park, S.A. de C.V., claim to operate in the tourism industry.
Another three companies claim to be engaged in real estate activities: Colinas Proyectos Y Construcciones, S.A. de C.V., Ornitorrinco Inmobiliaria, S.A. de C.V., and VG Desarrollos De La Bahia, S.A. de C.V. In addition, four of the companies are purportedly operating in the financial services sector: Deep Blue Desarrollos, S. de R.L. de C.V., Deep Blue Servicios, S.A. de C.V., Estrategia PVR, S. de R.L. de C.V., and Reef Administracion Avanzada, S. de R.L. de C.V.
This diverse corporate network also includes a business services company (Asesoria y Servicios Importadores, S.A. de C.V.), a holding company (Corporativo Controlador Explora, S.A. de C.V.), and a fuel company (Solugas Soluciones en Gasolineras, S.A. de C.V.).
These 13 companies are being sanctioned pursuant to E.O. 14059 and pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Rivera Miramontes.
Hotel Management International, LLC is a Texas-based entity that is owned by Rivera Miramontes. Hotel Management International, LLC is being identified as blocked for being property in which Rivera Miramontes, a person whose property and interest in property are blocked pursuant to E.O. 14059 and pursuant to E.O. 13224, has an interest.
In addition, sanctioned are three real estate companies owned by Palacios Rodriguez — Constructora Palacios PV, S.A. de C.V., Agencia de Servicios Turisticos Internacionales G8, S.A. de C.V., and Corporativo de Transferencias Internacionales de Bienes Raices, S.A. de C.V.
These companies are being sanctioned pursuant to E.O. 14059 and pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Palacios Rodriguez.
OFAC also sanctioned Club Deportivo de Formacion al Futbol GMX, S. de R.L. de C.V., a sports club owned by Tagayas that is being sanctioned pursuant to E.O. 14059 and pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Tagayas.
Thursday’s action marks the sixth time OFAC has sanctioned those linked, directly or indirectly, to CJNG’s timeshare fraud activities, resulting in the designation of over 90 individuals and entities to date.
OFAC has also issued a general license supporting ordinarily incident and necessary transactions to wind down operations at Kovay Gardens by U.S. persons.
