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Kovay Gardens advertises itself as a luxury escape on Mexico’s Pacific coast, boasting a private beach, alluring swimming pools, and impeccable service.
Last week, however, the U.S. Treasury Department sanctioned Kovay Gardens as part of what it alleges is a cartel-led timeshare fraud network. It implicates five individuals and 17 companies, many based around Puerto Vallarta, for allegedly defrauding victims, many of them American retirees, and repeatedly draining their savings through call centers.
That cartel is the Jalisco New Generation Cartel, or CJNG, whose leader, Nemesio Rubén Oseguera Cervantes, better known as "El Mencho," was killed by the Mexican army on the weekend.
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The Trump administration had designated CJNG as a foreign terrorist organization. It is one of the main suppliers of cocaine to the U.S. and earns billions from the production of fentanyl and methamphetamines. The White House later confirmed U.S. intelligence support for the raid, a sign that Mexico’s cartel problem is now inseparable from U.S. politics.
The bleaker background to the operation is that CJNG, in fact, doesn’t just traffic drugs. It has diversified into elder fraud, fuel theft, extortion, and bitcoin payments, all of which can target Americans. That means removing El Mencho, welcome as that development was to both the Mexican and U.S. governments, is not the end of its influence at home or abroad.
Common Knowledge
Sunday's killing of Oseguera Cervantes, in an operation in Jalisco, set off violent retaliation across Mexico. The U.S. Embassy issued shelter-in-place guidance in multiple states and roadblocks and arson followed.
For the American right, that killing and the reaction to it proves that these are narcoterrorists, and the U.S. should use the terrorism tool kit. White House spokesperson Karoline Leavitt said that “the United States will ensure narcoterrorists… are forced to face the wrath of justice they have long deserved."
When Treasury sanctioned CJNG-linked timeshare networks in 2025, Treasury Secretary Scott Bessent said, “We are coming for terrorist drug cartels… These cartels continue to create new ways to generate revenue… including their efforts to prey on elderly Americans through timeshare fraud.”
The Justice Department’s language is similar. In the Eastern District of New York’s 2025 timeshare-fraud case, Attorney General Pamela Bondi said a “senior leader of a foreign terrorist organization” allegedly defrauded Americans “to fuel terrorism against the American people.”
On the American left, the fear is that the “terrorism” designation can expand powers and justify unilateral action.
An MSNBC opinion column warned that shifting from a public-health frame to a security-threat frame “lays the groundwork to see their existence as a sufficient basis for acts of war.”
Uncommon Knowledge
CJNG, and other Mexican "narcoterrorists," are best understood less as cartels and more as diversified criminal holding companies with a staggering capacity for violence.
Treasury says Mexico-based cartels have targeted U.S. timeshare owners for years via English-fluent call centers. It says CJNG itself took control of the Puerto Vallarta/Bahía de Banderas timeshare industry “beginning in or about 2012.”
Scammers pose as brokers, attorneys, or sales reps. They offer a resale, “re-rent,” exit, or investment opportunity, then demand upfront “fees” and “taxes.” Victims are typically told to send the money by international wire to accounts at Mexican banks or brokerage houses. Once the money is gone, revictimization begins, with impersonated law firms or “government officials” threatening fines or offering recovery for a fee.
What makes Kovay Gardens different, according to Treasury officials, is that it collapses the scam into an assembly line. Treasury alleges that by controlling a resort, CJNG can defraud owners “from the moment they sign a contract and for years to come,” then share customer data with cartel call centers to repeat the cycle.
There have been over 850 suspicious activity reports, according to Treasury, totaling about $330 million, with an average amount of $383,000 and a median of $42,000. In other words, the cartel targets both whales and minnows. The median of $42,000 suggests a painful but sadly plausible loss for an American retiree. The average of $383,000 suggests a some victims are getting cleaned out at a life-ruining scale.
That's also where bitcoin comes in. According to Chainalysis, a crypto data platform, fentanyl precursor manufacturers openly accept payment in bitcoin and stablecoins. It also names CJNG as a major purchaser of those precursors used to manufacture synthetic opioids. This aligns with U.S. law enforcement’s own charging documents against China-based chemical firms.
So the cartel that runs a fraud scheme that prefers international wires from U.S. seniors and can route high-risk payments for fentanyl precursors though hard-to-trace crypto.
This is why the timeshare story matters beyond the painful consequences of elder fraud. It also hints at what El Mencho’s death may—and may not—change. Mexico’s operation removed a leader, but the fear remains of post-kingpin instability and violent fragmentation. A “vertically integrated fraud” system is not one man. And its victims are not only drug abusers.
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