Puerto Vallarta-area timeshare was a cartel-run fraud engine, Treasury Department says

Kovay Gardens sells itself as a secluded retreat on Mexico’s Pacific coast: a private beach along the Bahía de Banderas, four pools spilling toward the ocean and beds dressed in Egyptian cotton. Guests are promised room service, buffet breakfasts and airport shuttles to the boutique resort outside Puerto Vallarta. 

But U.S. officials say that behind the 22-room beachfront timeshare is a cartel-run fraud engine that has drained millions from American visitors.

The U.S. Treasury Department on Thursday sanctioned Kovay Gardens, accusing the resort in Nayarit of operating under the direction of the Cartel de Jalisco Nueva Generación, or CJNG. The move also targeted an entire network of people and companies the federal government says worked with the cartel to defraud U.S. citizens, including many older American victims who lost life savings to the schemes.

For more than a decade, CJNG consolidated control over timeshare scams in Puerto Vallarta and the surrounding Bahía de Banderas, according to the U.S. Treasury, expanding influence in a region spanning Jalisco and Nayarit and drawing tens of thousands of U.S. tourists annually. 

Officials say that at Kovay Gardens, prospective buyers were lured into sales pitches that promised luxury and vowing unused weeks could generate even more in rental income. Once owners signed contracts, the resort allegedly overcharged credit cards, feeding customer data directly into CJNG-run call centers that launched waves of additional investment scams, allowing the cartel to profit repeatedly from the same victims. After initial losses, Americans were contacted again by callers posing as lawyers or officials who then claimed they could help recover the money for yet another fee, while others were threatened with fines or legal trouble unless they paid, officials say.

Treasury officials described the operation, which sat inside CJNG’s territorial base, as a vertically integrated fraud factory: a cartel-controlled resort that generated victims for a database supplying targets to boiler-room call centers that extracted payments via international wire transfers.

According to the U.S. government, timeshare fraud networks in Nayarit were overseen by cartel commander Audias Flores Silva, with lieutenants collecting payments from call centers linked to Kovay Gardens. 

Officials say a U.S. alert on Mexico-based timeshare fraud issued in March 2023 has generated more than 850 suspicious activity reports flagging about $330 million in potentially fraudulent transactions, largely involving Americans wiring money to scammers in Mexico. Within the U.S. Treasury, FinCEN says it now receives roughly 40 such reports a month, while the FBI says about 6,000 U.S. victims reported nearly $300 million in losses from 2019–2023, with another $50 million reported in 2024. Still, officials believe the statistics are undercounts because many victims never come forward due to fear or embarrassment. 

This week’s sanctions mark the latest U.S. action against CJNG’s diversification beyond narcotics. In addition to tourism, the cartel has also expanded into fuel theft, extortion and financial fraud, often masking those operations behind legitimate-looking businesses.