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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This winter, Bloomberg's Andrea Navarro took a trip to Tulum,

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Speaker 2: a popular tourist destination on Mexico's Yucatan Peninsula.

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Speaker 1: On a regular day, the water is an incredible color

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Speaker 1: of torquoise and weather it's nice almost all year round.

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Speaker 2: But what had brought Andrea to tuluom wasn't the beach,

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Speaker 2: or the weather or the turquoise ocean. She was there

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Speaker 2: to get an up close look at what was supposed

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Speaker 2: to be a luxury condo complex.

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Speaker 1: It's just a very thick piece of jungle where there's

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Speaker 1: no development. There's nothing happening there, and that's where Akela

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Speaker 1: meant to develop Solemn Skyview.

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Speaker 2: There were meant to be about thirty units on this lot,

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Speaker 2: but when Andrea visited, there wasn't much progress to show.

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Speaker 1: So it's just jungle. They were never able to even

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Speaker 1: start clearing the land.

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Speaker 2: Wow, so they didn't break round. They didn't even like

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Speaker 2: bring a piece of wood to the scene.

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Speaker 1: Nothing.

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Speaker 2: This development was one of a handful of projects, all

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Speaker 2: from the same company that promised investors a slice of paradise.

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Speaker 2: Andrea went to see a few of those sites. While

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Speaker 2: she was Intulom, there was Solemn Ocean.

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Speaker 1: This was supposed to be a thirty unit building, which

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Speaker 1: of course never got built.

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Speaker 2: And there was Solemn Downtown right now.

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Speaker 1: We would guess that about sixty percent of the building

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Speaker 1: was done.

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Speaker 2: There was also a Solemn Lagoon and a Solemn laundra,

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Speaker 2: but only one Solemn was actually completed, Solemn Peaceful. The

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Speaker 2: Solemns were part of a pandemic real estate boom and

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Speaker 2: tulom driven by remote workers who were looking to relocate.

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Speaker 2: But now five years after the start of the pandemic,

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Speaker 2: for some buyers, that Caribbean dream has become a nightmare.

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Speaker 1: From the lawyers, we know that there's hundreds more and

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Speaker 1: it's not all that they didn't receive their apartments, but

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Speaker 1: some aren't able to get the titles to the apartments

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Speaker 1: or they can't sell the apartments. So it's a lot

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Speaker 1: of different problems that are starting to spring up right now.

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Speaker 2: I'm Sarah Holder, and this is the big take from

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Speaker 2: Bloomberg News today on the show The Dark Side of

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Speaker 2: a development spree and t loom that left a trail

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Speaker 2: of ripped off investors millions of dollars in missing cash

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Speaker 2: and even two bodies in its wake. Bloomberg's Andrea Navarro

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Speaker 2: says that one of the first things that put to

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Speaker 2: Loom on the radar of international tourists and investors was

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Speaker 2: its proximity to Cankuhn and to Mayan Ruins.

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Speaker 1: Can Kuhn got so crowded over the past few years

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Speaker 1: that people started branching out and looking for other resorts.

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Speaker 2: In early twenty tens, Tlloom's appeal was more boutique hotels

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Speaker 2: and yoga retreats, while Knkuhn was more big resorts and

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Speaker 2: a party vibe senor Frogs if you're familiar. It wasn't

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Speaker 2: until the pandemic lockdowns of twenty twenty and twenty twenty

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Speaker 2: one that development intulum really started to take off.

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Speaker 3: It was one of the places in the world that

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Speaker 3: had very few restrictions during the pandemic, so it was

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Speaker 3: kind of a siren call to all of these digital nomads,

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Speaker 3: all of these people who wanted to be in that

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Speaker 3: environment and continue to work.

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Speaker 2: That's Bloomberg's the naz Mcjohnny, She and Andrea worked together

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Speaker 2: on the story.

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Speaker 3: And I think that attracted a lot of attention from

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Speaker 3: buyers and from developers, and we were initially looking at

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Speaker 3: how during the early pandemic days there was so much

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Speaker 3: demand for luxury apartments that all of these developers came

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Speaker 3: in and started building.

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Speaker 2: Andrea says some of those developers had established track records

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Speaker 2: working in and around Cancun, but the surgeon demand for

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Speaker 2: property in Tulum was so intense that it also attracted newer,

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Speaker 2: less experienced companies looking to take advantage of the moment.

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Speaker 2: One of those companies was a Keila Development Group, the

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Speaker 2: developer behind the solemn properties.

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Speaker 1: So akle As, a company that we found out was

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Speaker 1: established in twenty eighteen by three partners, all Mexican, and

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Speaker 1: they started marketing these developments around twenty nineteen or twenty twenty.

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Speaker 1: Were not exactly sure of the date, but we do

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Speaker 1: know that they had six developments in progress at some point.

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Speaker 2: Their marketing renderings, which Andrea Antanas saw, shared a luxury

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Speaker 2: high gloss fuel.

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Speaker 1: They really played up the amenities, so they had infinity

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Speaker 1: pools and yoga classes and fire pits and places where

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Speaker 1: people could just read in the jungle or take a

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Speaker 1: class in the outdoor gym.

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Speaker 3: Oh they were stunning. Some of them would have private

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Speaker 3: pools that were connected to each unit. So yeah, they

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Speaker 3: looked idyllic. Who wouldn't want to live there?

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Speaker 4: After seeing that everything about it was a dream, it

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Speaker 4: was perfect.

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Speaker 2: Aaron Norris still remembers the plan for the unit she

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Speaker 2: tried to buy in Solemn Skyview.

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Speaker 4: The development was is going to be about thirty town

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Speaker 4: homes situated around a man made lagoon that was also

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Speaker 4: doubling as a swimming pool. It was just meant to

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Speaker 4: look like a lagoon. It was really beautiful and peaceful

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Speaker 4: looking these large arched windows that looked out over the jungle,

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Speaker 4: and it just had a really peaceful and serene feel

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Speaker 4: about it.

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Speaker 2: Noras had been vacationing in Mexico since she was a

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Speaker 2: child and had spent fifteen years visiting Toulum before she

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Speaker 2: decided she was ready to buy.

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Speaker 4: Initially, I had wanted to buy something that was already built,

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Speaker 4: but in working with my realtor, she told me, you know,

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Speaker 4: you've got a better opportunity to get something that's brand new.

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Speaker 4: It's less expensive when you buy something that's pre built

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Speaker 4: or through a pre sale. I guess you can pay

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Speaker 4: over time rather than doing one large lump sum payment.

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Speaker 4: And As a single income. That was really attractive being

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Speaker 4: able to space out my payments over time rather than

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Speaker 4: just throw everything down all at once.

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Speaker 2: Norris was sold. She agreed to buy a unit for

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Speaker 2: just under two hundred thousand dollars, which she negotiated to

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Speaker 2: pay over seven installments, and as she started sending money,

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Speaker 2: she started seeing progress.

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Speaker 4: The developer sent me videos on a pretty regular basis

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Speaker 4: showing hey, look we've started clearing the land. And then

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Speaker 4: a little later, oh, here's an update. All of these

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Speaker 4: materials have been ordered, they're starting to get delivered.

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Speaker 2: But then the updates started to slow.

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Speaker 4: Eventually an email came that there was a land dispute

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Speaker 4: and that I should stop making payments, but that they

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Speaker 4: felt they were fully within their rights and that you know,

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Speaker 4: the land dispute would be resolved soon. This would probably

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Speaker 4: impact the completion date, but that they would expedite things

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Speaker 4: once everything was resumed.

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Speaker 2: Nora says that was the last time she heard from

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Speaker 2: a Kaylae.

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Speaker 4: They would not respond to any phone calls or emails,

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Speaker 4: just became impossible to get a hold of.

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Speaker 2: At that point, Norris eventually found out there was a

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Speaker 2: reason all her outreach was getting ignored. The real estate

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Speaker 2: group was starting to unravel.

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Speaker 3: She'd found out that one of the developers in the

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Speaker 3: group had died and his body had been found on

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Speaker 3: a beach, another one allegedly committed suicide, and a third

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Speaker 3: has allegedly left the country.

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Speaker 2: Norris is one of many people the Akala Development group

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Speaker 2: left in the lurch. Andrea Antanas interviewed dozens of buyers

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Speaker 2: and their attorneys. They reviewed sales pitches and lawsuits, and

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Speaker 2: they estimate the developer sold at least another seventy pre

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Speaker 2: sale units that they never delivered. It was part of

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Speaker 2: a pattern of alleged fraud that was far bigger than

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Speaker 2: the aspiring home buyers and the reporters initially thought what

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Speaker 2: we know about the downfall of Akela and the recourse

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Speaker 2: for its victims after the break. Bloomberg's Andrea Navarro and

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Speaker 2: Thanas mcjohnny have been digging into the dark side of

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Speaker 2: a pandemic era real estate boom in the coastal Mexican

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Speaker 2: town of Tuloom. They say that one factor that's made

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Speaker 2: the boom there more complicated is that land ownership and

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Speaker 2: bureaucracy in the town can be tricky to navigate.

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Speaker 1: The government is sort of a archaic in some ways.

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Speaker 1: Files are not digitized, the court system is not digitized

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Speaker 1: one hundred percent, so a lot of processes have to

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Speaker 1: be done in person, so it's not easy.

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Speaker 2: That can make it hard to know who owns what

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Speaker 2: or when land was bought and sold. There's also been

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Speaker 2: a long history of land theft in Quintana Rue, the

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Speaker 2: Mexican state where Tuloom is located. The problem has become

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Speaker 2: so prevalent in recent years that a reporter asked Mexican

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Speaker 2: President Claudia Scheinbaum about the issue in early December. She

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Speaker 2: acknowledged that there's been a pattern of a legal development

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Speaker 2: in the state and said that she had asked one

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Speaker 2: of her ministers and the state's governor to look into it.

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Speaker 2: A land dispute was also one of the problems at

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Speaker 2: Solemn Skyview, the development where Aaron Norris had purchased her unit.

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Speaker 2: Part way through development, allegations surface that Akela had stolen

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Speaker 2: the land from its rightful owner.

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Speaker 1: She was an older woman who had bought the land

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Speaker 1: in the early two thousands with a long term plan

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Speaker 1: of building a retirement home there. She had never gotten

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Speaker 1: around to actually developing the land, but she as a

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Speaker 1: person does. She went and paid her taxes regularly, so yeah,

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Speaker 1: she did not sign away her rights, and she was

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Speaker 1: very shocked, she told me when we first interviewed her,

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Speaker 1: to learn that the land was not officially hers anymore.

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Speaker 2: The land dispute was one red flag about Akela, but

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Speaker 2: Andrea says it's possible, well, the company was already in

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Speaker 2: other trouble after one of its partners died in a

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Speaker 2: suspected suicide. His son spoke to the police.

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Speaker 1: The police report does say that his son found him

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Speaker 1: and that when the son was talking to the police,

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Speaker 1: he told them that his father had become very depressed

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Speaker 1: because he had lost a lot of money. So there's

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Speaker 1: no way for us to know for sure that if

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Speaker 1: one thing that to another.

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Speaker 2: Bloomberg reached out to the partner's son through his relatives

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Speaker 2: and a phone number that recently belonged to him. He

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Speaker 2: could not be reached for comment. Andrea says it's hard

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Speaker 2: to know whether a Kayla's developments were scams from the

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Speaker 2: start or if the company just got in over its head.

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Speaker 2: After all, they did deliver one building, But if the

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Speaker 2: allegations of land theft are true, that points to shadier origins.

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Speaker 2: What did the disappearance and the deaths of these developers

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Speaker 2: mean for the people who had bought homes from them?

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Speaker 3: For a lot of them, it meant that there was

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Speaker 3: nowhere they could turn to find answers. You talk to

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Speaker 3: a lot of people who went through lawyer after lawyer

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Speaker 3: after a lawyer to try to get some clarity and

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Speaker 3: some understanding of what had happened, and I think many

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Speaker 3: of them are still kind of mired in the legal

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Speaker 3: process of trying to figure out what comes next and

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Speaker 3: how much money they can recover.

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Speaker 2: What kind of legal recourse do they have.

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Speaker 1: It seems like they don't have much. I mean, from

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Speaker 1: what we've heard, they've been chasing these lawsuits for years now.

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Speaker 1: And it's also been a very slow gain for them

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Speaker 1: because they didn't really find out about the deaths until

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Speaker 1: much later. Then when they happened, the office stopped responding

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Speaker 1: to text and messages over the course of several months,

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Speaker 1: and so I think that that's what's been the worst

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Speaker 1: thing for them, is just trying to figure out what happened.

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Speaker 1: But after they did, it's been unclear for them, like

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Speaker 1: what even to do because there's no company to sue anymore.

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Speaker 1: So it's it's weird. They don't really know what to do.

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Speaker 1: They've gone to several agencies in Mexico and some of

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Speaker 1: them have even gone to the FBI, but they haven't

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Speaker 1: had any help. It doesn't seem like there's much hope,

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Speaker 1: to be honest.

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Speaker 3: Another piece of this that I think is really interesting

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Speaker 3: is that all of this is kind of coming to

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Speaker 3: the surface now. And one lawyer that Andrea spoke to

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Speaker 3: mentioned her hypothesis that all of these units were purchased

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Speaker 3: around the pandemic and the delivery dates were around now

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Speaker 3: in the last year or so. So now this lawyer

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Speaker 3: is hearing from a lot of people who went through

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Speaker 3: these experiences, and yeah, it's all coming to light now

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Speaker 3: because now is when they were expecting to receive their homes.

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Speaker 3: So I think we've uncovered some of this. It's really

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Speaker 3: difficult to say how many people were impacted by this.

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Speaker 3: It seems like this is going to contain and you

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Speaker 3: to be uncovered as time goes on.

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Speaker 2: In the meantime, other projects have raised concerns. Some developers

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Speaker 2: didn't have soil mechanics studies, which are crucial for building

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Speaker 2: around Tulum. Others didn't have adequate planning or construction permits.

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Speaker 2: Tanas and Andrea spoke with one lawyer who estimates that

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Speaker 2: over the past four to five years he's seen more

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Speaker 2: than one hundred clients in the area who've had problems

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Speaker 2: with developers delivering on their promised units. Is there any

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Speaker 2: indication that buyers are now staying away from Tulum because

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Speaker 2: of stories like this?

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Speaker 1: I don't think so. I visited in February, and the

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Speaker 1: same as when Tana's visited, construction is just insane. It's

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Speaker 1: still going on. From what we know. People are still

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Speaker 1: buying and the problem is, yeah, that they won't find

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Speaker 1: out what happens until the delivery date comes by, whether

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Speaker 1: they're getting their apartment or not. So maybe a few

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Speaker 1: years down the road or even a few months down

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Speaker 1: the road, people start hearing about these scams more often

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Speaker 1: and start being more cautious. But I don't think that

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Speaker 1: we're there yet.

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Speaker 2: This is the big take from Bloomberg News. I'm Sarah Holder.

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Speaker 2: This episode was produced by David Fox. It was edited

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Speaker 2: by Tracy Samuelson and Danielle Balby. It was fact checked

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Speaker 2: by Audre Anatapia and mixed and sound designed by Alex Sugiura.

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Speaker 2: Special thanks to Henry Baker. Our senior producer is Naomi Shaven.

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Speaker 2: Our senior editor is Elizabeth Ponso. Our executive producer is

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Speaker 2: Nicole beamsterbor Sage Bauman is Bloomberg's head of podcasts. If

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Speaker 2: you liked this episode, make sure to subscribe and review

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