The US Treasury Department has taken significant action against Kovay Gardens, a luxury resort located in Riviera Nayarit, by imposing sanctions due to its alleged involvement in a timeshare fraud scheme connected to the Jalisco New Generation Cartel (CJNG). Announced on February 19, 2026, by the Office of Foreign Assets Control (OFAC), this action also targets five individuals and 17 Mexican companies reportedly engaged in defrauding thousands of American citizens, predominantly seniors. This development raises serious concerns about the resort's legitimacy and its ties to organized crime.

Kovay Gardens is marketed as a luxury getaway in a private cove in Bahía de Banderas, specifically in La Cruz de Huanacaxtle, Nayarit, near Puerto Vallarta. According to its official website, it offers various amenities such as high-end restaurants, a gym, beachfront pools, jacuzzis, bars, and private cabanas, presenting an appealing vacation paradise for visitors. However, the mounting legal ramifications from these allegations could tarnish the resort's image and deter potential guests who may be wary of its connections to criminal organizations.

This case also reflects a broader issue of organized crime infiltrating legitimate businesses in Mexico, particularly in tourist-heavy regions. The warning issued by the US government underscores the significant risks involved in engaging with establishments linked to illicit activities. Furthermore, this situation places pressure on Mexican authorities to strengthen their regulatory frameworks to combat corruption and protect tourists from fraudulent operations, especially in a country that depends heavily on international tourism for economic stability.