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This winter, Bloomberg's Andrea Navarro took a trip to Tulum, a popular tourist destination on Mexico's Yucatan Peninsula.
On a regular day, the water is an incredible color of torquoise and weather it's nice almost all year round.
But what had brought Andrea to Tuloom wasn't the beach, or the weather or the turquoise ocean. She was there to get an up close look at what was supposed to be a luxury condo complex.
It's just a very thick piece of jungle where there's no development. There's nothing happening there, and that's where Akela meant to develop Solemn Skyview.
There were meant to be about thirty units on this lot, but when Andrea visited, there wasn't much progress to show.
So it's just jungle. They were never able to even start clearing the land.
Wow, so they didn't break round. They didn't even like bring a piece of wood to the scene.
Nothing.
This development was one of a handful of projects, all from the same company that promised investors a slice of paradise. Andrea went to see a few of those sites. While she was Intulom, there was Solemn Ocean.
This was supposed to be a thirty unit building, which of course never got built.
And there was Solemn Downtown right now.
We would guess that about sixty percent of the building was done.
There was also a Solemn Lagoon and a Solemn laundra, but only one Solemn was actually completed, Solemn Peaceful. The Solemns were part of a pandemic real estate boom and tulom driven by remote workers who were looking to relocate. But now five years after the start of the pandemic, for some buyers, that Caribbean dream has become a nightmare.
From the lawyers, we know that there's hundreds more and it's not all that they didn't receive their apartments, but some aren't able to get the titles to the apartments or they can't sell the apartments. So it's a lot of different problems that are starting to spring up right now.
I'm Sarah Holder, and this is the big take from Bloomberg News today on the show The Dark Side of a development spree and to loom that left a trail of ripped off investors, millions of dollars in missing cash, and even two bodies in its wake. Bloomberg's Andrea Navarro says that one of the first things that put to Loom on the radar of international tourists and investors was its proximity to Cankuhn and to Mayan Ruins.
Can Kuhn got so crowded over the past few years that people started branching out and looking for other resorts.
In early twenty tens, Tlloom's appeal was more boutique hotels and yoga retreats, while Knkuhn was more big resorts and a party vibe senor Frogs if you're familiar. It wasn't until the pandemic lockdowns of twenty twenty and twenty twenty one that development intulum really started to take off.
It was one of the places in the world that had very few restrictions during the pandemic, so it was kind of a siren call to all of these digital nomads, all of these people who wanted to be in that environment and continue to work.
That's Bloomberg's the nas Mcjohnny, She and Andrea worked together on the story.
And I think that attracted a lot of attention from buyers and from developers, and we were initially looking at how during the early pandemic days there were so much demand for luxury apartments that all of these developers came in and started building.
Andrea says some of those developers had established track records working in and around Cancun, but the surgeon demand for property in Tulum was so intense that it also attracted newer, less experienced companies looking to take advantage of the moment. One of those companies was a Keila Development Group, the developer behind the solemn properties.
So akle As, a company that we found out was established in twenty eighteen by three partners, all Mexican, and they started marketing these developments around twenty nineteen or twenty twenty. Were not exactly sure of the date, but we do know that they had six developments in progress at some point.
Their marketing renderings, which Andrea Antanas saw, shared a luxury high gloss fuel.
They really played up the amenities, so they had infinity pools and yoga classes and fire pits and places where people could just read in the jungle or take a class in the outdoor gym.
Oh they were stunning. Some of them would have private pools that were connected to each unit. So yeah, they looked idyllic. Who wouldn't want to live there?
After seeing that everything about it was a dream, it was perfect.
Aaron Norris still remembers the plan for the unit she tried to buy in Solemn Skyview.
The development was is going to be about thirty town homes situated around a man made lagoon that was also doubling as a swimming pool. It was just meant to look like a lagoon. It was really beautiful and peaceful looking these large arched windows that looked out over the jungle, and it just had a really peaceful and serene feel about it.
Noras had been vacationing in Mexico since she was a child and had spent fifteen years visiting Toulum before she decided she was ready to buy.
Initially, I had wanted to buy something that was already built, but in working with my realtor, she told me, you know, you've got a better opportunity to get something that's brand new. It's less expensive when you buy something that's pre built or through a pre sale. I guess you can pay over time rather than doing one large lump sum payment. And As a single income. That was really attractive being able to space out my payments over time rather than just throw everything down all at once.
Norris was sold. She agreed to buy a unit for just under two hundred thousand dollars, which she negotiated to pay over seven installments, and as she started sending money, she started seeing progress.
The developer sent me videos on a pretty regular basis showing hey, look we've started clearing the land. And then a little later, oh, here's an update. All of these materials have been ordered, they're starting to get delivered.
But then the updates started to slow.
Eventually an email came that there was a land dispute and that I should stop making payments, but that they felt they were fully within their rights and that you know, the land dispute would be resolved soon. This would probably impact the completion date, but that they would expedite things once everything was resumed.
Nora says that was the last time she heard from a Kaylae.
They would not respond to any phone calls or emails, just became impossible to get a hold of.
At that point, Norris eventually found out there was a reason all her outreach was getting ignored. The real estate group was starting to unravel.
She'd found out that one of the developers in the group had died and his body had been found on a beach, another one allegedly committed suicide, and a third has allegedly left the country.
Norris is one of many people the Akeala development group left in the lurch. Andrea Antanas interviewed dozens of buyers and their attorneys. They reviewed sales pitches and lawsuits, and they estimate the developer sold at least another seventy pre sale units that they never delivered. It was part of a pattern of alleged fraud that was far bigger than the aspiring home buyers and the reporters initially thought what we know about the downfall of Akela and the recourse
for its victims after the break. Bloomberg's Andrea Navarro and Thanas mcjohnny have been digging into the dark side of a pandemic era real estate boom in the coastal Mexican town of Tuloom. They say that one factor that's made the boom there more complicated is that land ownership and bureaucracy in the town can be tricky to navigate.
The government is sort of a archaic in some ways. Files are not digitized, the court system is not digitized one hundred percent, so a lot of processes have to be done in person, so it's not easy.
That can make it hard to know who owns what or when land was bought and sold. There's also been a long history of land theft in Quintana Rue, the Mexican state where Tuloom is located. The problem has become so prevalent in recent years that a reporter asked Mexican
President Claudia Scheinbaum about the issue in early December. She acknowledged that there's been a pattern of a legal development in the state and said that she had asked one of her ministers and the state's governor to look into it. A land dispute was also one of the problems at Solemn Skyview, the development where Aaron Norris had purchased her unit. Part way through development, allegations surface that Akela had stolen the land from its rightful owner.
She was an older woman who had bought the land in the early two thousands with a long term plan of building a retirement home there. She had never gotten around to actually developing the land, but she as a person does. She went and paid her taxes regularly, so yeah, she did not sign away her rights, and she was very shocked, she told me when we first interviewed her, to learn that the land was not officially hers anymore.
The land dispute was one red flag about Akela, but Andrea says it's possible, well, the company was already in other trouble after one of its partners died in a suspected suicide. His son spoke to the police.
The police report does say that his son found him and that when the son was talking to the police, he told them that his father had become very depressed because he had lost a lot of money. So there's no way for us to know for sure that if one thing that to another.
Bloomberg reached out to the partner's son through his relatives and a phone number that recently belonged to him. He could not be reached for comment. Andrea says it's hard to know whether a Kayla's developments were scams from the start or if the company just got in over its head. After all, they did deliver one building, But if the allegations of land theft are true, that points to shadier origins.
What did the disappearance and the deaths of these developers mean for the people who had bought homes from them?
For a lot of them, it meant that there was nowhere they could turn to find answers. You talk to a lot of people who went through lawyer after lawyer after a lawyer to try to get some clarity and some understanding of what had happened, and I think many of them are still kind of mired in the legal process of trying to figure out what comes next and how much money they can recover.
What kind of legal recourse do they have.
It seems like they don't have much. I mean, from what we've heard, they've been chasing these lawsuits for years now. And it's also been a very slow game for them because they didn't really find out about the deaths until much later. Then when they happened, the office stopped responding to text and messages over the course of several months, and so I think that that's what's been the worst thing for them, is just trying to figure out what happened.
But after they did, it's been unclear for them, like what even to do because there's no company to sue anymore. So it's it's weird. They don't really know what to do. They've gone to several agencies in Mexico and some of them have even gone to the FBI, but they haven't had any help. It doesn't seem like there's much hope, to be honest.
Another piece of this that I think is really interesting is that all of this is kind of coming to the surface now. And one lawyer that Andrea spoke to mentioned her hypothesis that all of these units were purchased around the pandemic and the delivery dates were around now in the last year or so. So now this lawyer is hearing from a lot of people who went through these experiences, and yeah, it's all coming to light now because now is when they were expecting to receive their homes.
So I think we've uncovered some of this. It's really difficult to say how many people were impacted by this. It seems like this is going to contin and you to be uncovered as time goes on.
In the meantime, other projects have raised concerns. Some developers didn't have soil mechanics studies, which are crucial for building around Tulum. Others didn't have adequate planning or construction permits. Tanas and Andrea spoke with one lawyer who estimates that over the past four to five years he's seen more than one hundred clients in the area who've had problems
with developers delivering on their promised units. Is there any indication that buyers are now staying away from Tulum because of stories like this?
I don't think so. I visited in February, and the same as when Tana's visited, construction is just insane. It's still going on. From what we know. People are still buying and the problem is, yeah, that they won't find out what happens until the delivery date comes by, whether they're getting their apartment or not. So maybe a few years down the road or even a few months down the road, people start hearing about these scams more often
and start being more cautious. But I don't think that we're there yet.
This is the big take from Bloomberg News. I'm Sarah Holder. This episode was produced by David Fox. It was edited by Tracy Samuelson and Danielle Balby. It was fact checked by Audre Anatapia and mixed and sound designed by Alex Sugiura. Special thanks to Henry Baker. Our senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponso. Our executive producer is Nicole beamsterbor Sage Bauman is Bloomberg's head of podcasts. If you liked this episode, make sure to subscribe and review
The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow