The Daily - How One Family Lost $900,000 in a Timeshare Scam

Episode Date: April 12, 2024

Warning: this episode contains descriptions of violence.A massive scam targeting older Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.Maria Abi-Habib, an investigative correspondent for The Times, tells the story of a victim who lost everything, and of the criminal group making the scam calls — Jalisco New Generation, one of Mexico’s most violent cartels.Guest: Maria Abi-Habib, an investigative correspondent for The New York Times based in Mexico City.Background reading: How a brutal Mexican drug cartel came to target seniors and their timeshares.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

Hello, James. Hello. Hey, how's it going? Yeah. I'm not having much luck. So the problem is funding. And all of my money is in Mexico. All of it.

From The New York Times, I'm Katrin Benhold. This is The Daily. A massive scam targeting elderly Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico. Once you move forward and make your payment, if anything were to happen, he will directly pay you the full amount of what you're entitled to, including the gains. He will pay you the full amount. You've got all my money. It's been sent.

I sold a freaking house. Listen to this. I sold a house that I grew up in so that I could come up with funds to send to Mexico. I don't even have anything from the sale. Nothing. My colleague, Maria Abihabib, on one victim who lost everything and the people on the other side of the phone. That's it. That's it. You know what? That's what has been said every freaking time. Every time. Just pay this. That releases the phone. That's why we won't allow it to happen again. This is the last time, James.

It's Friday, April 12th. Maria, you've been looking into the scam that's targeting Americans. Where did your investigation start? So several weeks ago, I received a phone call from a lawyer based in St. Petersburg, Florida, who had been contacted by a family who was very concerned that the father, this man named James, was in the middle of being scammed. of thousand dollars to Mexico. And he was considering sending another $157,000 when his daughter decided to call up this law firm and try to get her father to stop, stop sending money to Mexico. So I called him a few weeks ago as I was trying to understand what was going on. Hello. Hi, James. How are you? Good. Thank you. He's asked that his last name be withheld for privacy concerns

because he's quite embarrassed about the story that I'm about to tell you. You're retired now, but what were you doing for work? And if your wife was working, what was her job? I was with the Highway Patrol. James is a retired state trooper from California, and his wife, Nikki, is a former school nurse. She was born in 51, so 71-ish. Okay. She just reminded me, 72. And they're both in their early 70s, and they own this timeshare that is in Lake Tahoe, California. And they bought both in their early 70s. And they own this timeshare that is in Lake Tahoe, California.

And they bought it in the 1990s for about $8,000. And for someone who did not grow up vacationing in a timeshare, remind me how exactly timeshares work. Timeshares are essentially vacation properties, and they tend to be beach resorts. And multiple people can buy into this property. The ownership is a shared ownership. And this gives you the right to use the timeshare for one to two weeks out of every year.

And so James and Nikki use their timeshare every other year with their daughters. use their timeshare every other year with their daughters. But as they hit retirement age and their daughters are growing up and starting their own families, they're just not really using it that much anymore. And timeshares require the owners to pay off yearly maintenance fees. And so they're starting to think about maybe letting go of their timeshare and selling it. Then one day in late 2022, James gets a phone call from a company that is purporting to be based out of Atlanta, Georgia, called Worry Free Vacations. Worry Free Vacations. Yeah. That sounds enticing. Yeah. And they start off with a

simple question, which is, do you want to buy a timeshare? And James says, I already have a timeshare. And then they say, great. Well, what about selling the timeshare? Do you want to sell? There's this Mexican businessman, and he's interested in your timeshare and he's willing to buy it for about $20,000. And James jumps at the opportunity. And did he do anything to try and verify that this was real? Yeah. So remember, James is former law enforcement and he feels very confident in his abilities to kind of sniff out untrustworthy people. So he goes online and he Googles this Mexican businessman and sees that, yeah, he is a real person.

He's a very well-respected individual in Mexico, you know, very well off. And this makes James feel at ease, you know, that he's selling to a legitimate person, that worry-free vacations are who they claim to be, and that he's going to double his money overnight, essentially. And what happens next? Well, a couple of weeks after he makes the agreement with the buyer, he's told that he needs to send a couple of thousand dollars to facilitate the purchase. What does that mean, facilitate? I can't remember specifically whether it was supposed to be cross-border registration. So he's being told that there are these fees that are paid directly to the Mexican government. A lot of these fees are the same types of fees that you would pay in the United States for a real estate transaction.

So he begins wiring money to an account in Mexico. After that, a few days later, we get a notification, well, everything went well, except that we have to pay an additional fee. Every time that he sends one fee, he's being told that, you know, he's got to send another fee right afterwards. Does he get suspicious at any point? His wife is suspicious. After, you know, the first couple of payments, she starts saying, this does not feel right. But, you know, James is the former law enforcement officer, right? And he's the one that basically handles the family finances.

And he's confident that all of this is going to work out because he's being told that the buyer of the timeshare will reimburse James for all of these fees once the sale goes through. once the sale goes through. Michael from the Worry-Free Vacations was constantly reassuring, your money's in that account, check with the commercial escrow account. It's there. It's just these P's have to be paid and you're being reimbursed for all of this.

They're sending James documents that show all of the reimbursements that he's owed and how much money he's going to get. And this just makes him feel like, you know, all of this is kosher. We had this commercial escrow company that was involved out of New York. So there was an air of legitimacy that I was comfortable with. You know, maybe, OK, these guys just need one more fee and everything is going to finally be cleared.

But about a year in, James starts to get suspicious. He begins asking questions because he wants his money. And every time I asked, hey, is there a way I can get a partial release of these funds? There was always no, these funds have to be paid from your account before they're released. But worry-free vacations, they pivot.

And they tell him that, listen, you know, there are all these complications. It's going to be really hard to get your money out from this transaction. I could pay about $30,000 and change to reinvest the $313,000 into an environmentally conscious development in Loretto, Mexico. Instead, we've got this other investment opportunity in Mexico. And I'm sure you know where that is over on the east coast of Baja. Mm-hmm. And that is going to make you a huge return.

Even more money than you had thought that you were going to make. Much more than the $20,000. I'm supposed to have like 54 million pesos in a Mexican bank account. Yeah. Okay. So this is now no longer just about his timeshare. They are now partners in a real estate investment. Right.

And there's this whole new round of fees and fines associated with that. So how many payments would you say? Oh, geez. Quite a few. A couple dozen at least, maybe more. When was your last payment? It would have been 17 January. Uh-huh. And what was that for? Good question. And all along, he believed it was necessary to pay these costs just to get the money that he's owed. You know, the amount of money that I've sent to Mexico is just freaking exorbitant.

And I mean, it is approaching $900,000 or more. Wow. Okay. And at this point, he's sent about $900,000 to Mexico over about a year and a half. Nearly a million dollars. That was almost all the money that he and his wife had saved for their retirement. Wow. It also included money from the sale of James's childhood home and money that he had borrowed from his daughter and son-in-law, about $150,000 from them. It's awful. So they were completely cleaned out by these guys. Yeah. And this is when his

daughter asks a law firm to look into this, which is the point in the story when I meet James. And when we start talking, it was clear to me that he just did not know what to think, even after losing this much money. So this started in 2022. When did it end? We're still in it. Oh, geez. And he's still talking to the scammers. And as a matter of fact,

presently there was a request for $157,000 in change to clear up this whole thing. It would clear the entire issue out. And James is even considering putting a second mortgage on his house to send that money that he'd been promised would finally clear all this up. One final payment of $157,000. It really sounds like he still wanted to believe that this was somehow legit. Yeah. It was pretty clear to me that he was being scammed, but I didn't definitively know what was going on. So I asked him if he could start recording his phone calls with the scammers.

Would you be so kind as to do me a favor? Yes. Would you be willing to give them a call and record them? I'll let you in on a little secret. I've been recording them. And it turns out he already had been. So he shared the recordings of these calls that he'd had with these scammers over the last year or so. And it was just remarkable. It gave me huge insight into how the scam worked and the way that it sounded over the phone. Is Michael in? I think he's trying to call me. I couldn't get through. Pick up.

Yes, I believe he did try to call you, sir. Give me a second. I think he's only going to be in for a couple minutes. One second. There are two main takeaways for me listening to these calls. Good afternoon. Michael McCarthy. Michael, I missed your call. I was trying to pick up. Yeah, don't worry. Yeah, I figured something was wrong with your phone. Everything okay? The first is that these scammers had really gotten to know James so well, and they really made James believe that Worry Free was a company that was working for him. That's why we need to hurry up and get this money over to you because, hey, I'm losing my mind too. I'm not even here to convince

you, James. I'm not, you know, I'm your broker. One of the things they continuously say is, trust me. Look, I'm doing everything I can in my power and will on my end. So James, just look, like I told you from the get-go, I'm going to resolve this and we are doing it. I just need you to focus on the goal. They would refocus the conversation on what James needed to do to get his money back. Look, if you make your payment as a security deposit, right away they will release the funds to you. And the other thing. that the scammers had created this elaborate cast of characters and some of them were really aggressive. James shared a recording of this one man

who claimed to be an agent for the Mexican government and he basically started yelling at James. I don't care if your wife is at the hospital. To be honest with you, I don't give a damn. But you know what I do give a damn? It's your money, and my name is Leonardo Ulrich. Do you understand? Yes.

And he even threatened James. If James didn't pay off these fines, then he would lose all the money that he'd sent to Mexico already. You could get the best lawyer you want. You could get whoever you want. And this is not a threat. This is facts. But anyways, who am I to convince you, right?

All right. Thank you for the information. Are you still there? Hello? Wow. So these scammers were basically doing a good cop, bad cop routine to stop James from walking away and to squeeze every last penny out of him. Exactly. And to squeeze every last penny out of him.

Exactly. If you provide me your email contact information, I will certainly be happy to forward all of the wire transfer information from my bank account to you so that you can see where those funds went. Yeah, that would be great. James asks me, a reporter who's based in Mexico, who speaks the language, if I could help him figure out where his money had gone to. Thank you very much.

I really appreciate your assistance. I'm just doing my job. Thanks again, and we'll talk soon. And the only way that I could figure that out was to understand who was on the other side of the phone. We'll be right back. So, Maria, who was on the other side of that phone line? So, by the time that I'd met James, I'd already gotten a tip from U.S. law enforcement agencies that they were seeing a new trend. Mexican drug cartels were getting involved in the timeshare scam industry.

Drug cartels. Yeah. And not just any drug cartel. This is one of the most notorious, violent, bloody drug cartels that exists in Mexico and Latin America, the Jalisco New Generation Cartel. And when I looked at James's bank records, guess what? All the money that he was sending was going to various bank accounts that were all located in Jalisco State in Mexico. Wow. So why would the drug cartels get into the timeshare scamming business? Why would the drug cartels get into the timeshare scamming business? It is a huge business.

The FBI told me that it's about $300 million in profits over the last five years. Wow. But the thing is, is that the potential for it to actually be multitudes more is huge. Because the FBI estimates that most of the scams are actually not even reported. In fact, only about 20% are. So that means the total timeshare scam business could actually be much larger than the $300 million that they have knowledge of over the last five years. But wait, I thought the drug business was a pretty lucrative business in itself. So why get into the scamming of elderly people for their properties in Lake Tahoe?

Well, you have to remember that these drug cartels, they're not just doing one thing, they're doing multiple things. They're essentially conglomerates because it's really expensive to run a cartel. You need to pay off officials, both Mexican and American. You need to maintain basically an army in order to secure your routes up to the United States, ports of entry into Mexico from Colombia. And like any big business, you need to diversify

your income to make sure that you keep the money flowing. Because you never know when one business is going to be shut down by authorities or taken over by your rivals. We've reported that they're now in the avocado business and the construction business. And timeshare fraud is basically no different than any of those. So we're seeing that the cartels have their fingers in many pies, the legitimate and the illegitimate economy here in Mexico. It's kind of fascinating to think of these drug cartels as like sprawling, diversified business empires. But when did the cartels first get into the scamming business? So Jalisco New Generation started about 15 years ago.

So Jalisco New Generation started about 15 years ago. And when they started to consolidate their empire in Jalisco State, they found that there were all these scammed timeshare call centers all over the state that were being run by various players. And that this was a huge, huge moneymaker because essentially all you have to do is call up retired senior citizens in the U.S. and Canada. It doesn't take that much money to run that kind of a scheme. There's no products you're making. So essentially they conducted a hostile takeover of these call centers. They went in, they kicked down doors and dragged out the people who were managing these call centers by their hair and threatened to kill them. Unless they gave up the call centers or started handing over a cut of what they made.

And slowly, slowly, Jalisco New Generation Cartel took over the entire timeshare fraud industry. Interesting. Were you able to find any of these call centers? So these call centers are pretty hard to find. They look like any other storefront. But I was able to visit two that were located in an upscale neighborhood in Guadalajara, which is the capital of Jalisco State. And it was just really perturbing because it was just so normal. Two villas about a mile away from each other, outside of one villa, parents were walking by holding their children's hands as they did drop off at school. It was right next to a park where people taking their morning exercise or their dogs for a walk. There was no real sign that the cartel was doing business there. But a few months before,

Mexican law enforcement had found the bodies of eight young people who had used to work at one of these call centers and said that the Jalisco cartel had killed them. Wow. What happened? the Jalisco cartel had killed them. Wow. What happened? So I wasn't able to talk directly to any of the victims' families. They're just too scared. But in general, this is usually how it starts. The cartel seeks out English speakers to work for their call centers.

Sometimes they don't even tell them what exactly they're doing. They would tell the recruits that the job was adjacent to the hotel industry. You have to remember Jalisco is a huge, huge tourism magnet for Americans and Canadians and others. And the cartel would get their call lists from bribing hotel employees to give them the names of people who stayed at these hotels and also at the timeshare resorts. And the people who would work at the call centers are provided the names and a manual of what you need to do when you call, kind of like a loose script of how to try to suck as much money as you can out of these people up north in Canada and the States.

So we don't know for sure what exactly happened with the eight young Mexicans who were killed last year, but through an intermediary, one sibling told us that when their family member knew what their job actually was, they became extremely uncomfortable and tried to leave the call center and find another job maybe. But the Jalisco New Generation Cartel is known for being extremely brutal. They chop off heads and they'll put them on the gates of a playground, for instance,

so that everybody in the neighborhood knows what went down. And in this case, it's possible that they wanted to send a warning that there's no defection from their timeshare call centers. So basically making a very scary example of these guys, in case anyone else is thinking about quitting one of the call centers. Exactly. And one man who runs an organization who advocates for missing people and actually organizes search parties to calm the forests of Jalisco State looking for the missing, says that he knows of about 30 people who have disappeared from the call centers in Jalisco State since 2017. in Jalisco State since 2017. So while Americans and Canadians might be losing much of their life savings in Mexico,

this is actually deadly. Are the authorities doing anything about this? Not really. Other than the fact that these two call centers were shut down, the authorities haven't arrested others. They're not putting pressure on Mexican banks, for instance, to look into these payments coming from senior citizens in the U.S. or Canada. And you have to remember that people are really afraid.

But you also have to remember that in are really afraid. But you also have to remember that in Mexico, things are not that clear. There is a lot of corruption and government collusion with organized crime and cartels. And the tourism industry, it is huge in Mexico, and particularly in Jalisco State. This is a multi-billion dollar industry. They don't want Americans or Canadians or Europeans who are coming to Jalisco for its beautiful beaches and its mountains to hear about these stories regarding the cartels being involved in the tourism industry and think, you know,

I'm not going to send my family there for that beach vacation. It's just simply too dangerous. So everybody has an incentive to have the scam continue, whether because they're too afraid and don't want to speak out or because they're in on it. So in a way, local authorities have an interest in sweeping it under the carpet in order to just maintain this idea of a tourist destination. Exactly. I mean, the spokeswoman for the prosecutor's office was very responsive to me until I told her what I wanted to ask her questions about. And then she just simply never answered any of my texts or phone calls.

So, Maria, based on everything you know, all the information you have, would you say that you're confident that the cartels were the ones who scammed James? Yes, 100%. Everything I've seen points in that direction. What did James say when you told him this? I've seen points in that direction. What did James say when you told him this? So it took him quite a while to really allow himself to believe it.

On the advice of his lawyers, he stopped picking up the phone calls. And about a week ago, they stopped after the scammers kept trying to call him. But you said he was in it for over a year. Why do you think it took him so long? Can you tell me after all of that that had been presented to you, why do you think you weren't willing to be entirely convinced? Well, I actually asked him that question. That's a very good question.

Why wasn't I able to pick up on that right away? And I think in the back of my mind, I'm finding out that I'm a little more stubborn than I thought I was. And for him, it was pretty complicated. And I think that I didn't want to believe that I had fallen for this. I didn't feel I was that foolish and stupid when it came to this. You know, I guess I didn't want to believe that I could be fooled. To come to terms with the fact that he had lost so much money was to come to terms with the fact that he wasn't the person that he thought that he was. That he wasn't this kind of, you know, clever former law enforcement officer who was used to fighting the bad guys and winning. You know, I'm disappointed in myself. who was used to fighting the bad guys and winning. You know, I'm disappointed in myself.

There's a huge level of anger towards the perpetrators. And, yeah, all of those things wrapped into one. And part of that, I think, contributes to not wanting to actually believe that I was wrong. Yeah, I hear you. I'm sorry, I can hear the pain in your voice. Yeah. Some of it's based on shame, right? That he lost all this money, everything that he's worked for,

and the fact that this was all supposed to be money that his children and his grandchildren were going to inherit. And now it's gone. And have you told your daughter that you think you've kind of come to terms with the fact that this might have been a scam? Oh, she's been involved. Yeah, they know. My daughter does. I'm sorry, this is a tough time. Yeah. So I've got to make some sort of arrangements to compensate them for this on top of our regular debt. So, yeah, it's been a swell experience.

All of it brought on by, evidently, my stubbornness to believe that I couldn't possibly be a victim. How's your wife doing throughout this whole process with this new knowledge? She's not real happy, obviously, at all. I hear a lot of, I told you so. And at this point, I've got no defense. She's absolutely right. No question about it.

Do you worry this is going to affect your marriage? Yes. There has been an effect. And do you think that at this point there's any way for James and his family to get some kind of justice or at least find some kind of closure? Justice, unlikely. At this point, I'm not necessarily expecting much in the way of restitution. And as for closure, it's a little bit too soon to tell. In a way, James has gone through several stages of acceptance for what happened.

There's fear, there's shame, there's resignation, and now he's talking to me, partly because he feels like it's a public service that he needs to be vocal so that other people don't go through what he's gone through and fall for the scam. And I think it also kind of helps him feel a little bit empowered in a situation for over the last year and a half. He was kind of at the mercy of these people who were calling him multiple times a week. people who were calling him multiple times a week.

I want to try to get as much information to as many of these official organizations as possible. I have a streak of anger through me now that I've developed to the point where I'm not going to let this go. Well, Maria, thank you. Thank you for having me. We'll be right back. Here's what else you need to know today. Thank you. Vegas, his family said Thursday. He was 76. Today's episode was produced by Asta Chetrovady and Will Reed, with help from Claire Tennis Cutter and Lindsay Garrison. It was edited by Brendan Klinkenberg and Michael Benoit, contains original music by Marion Lozano, Rowan Nemistow, Dan Powell, Pat McCusker, and and Will Reed and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for The Daily. I'm Katrin Benhold. See you on Monday.