Editorial: Another Look Back

(Editor’s note: I published the editorial below last year, explaining how I came to start the Lake Chapala Reporter, the Guadalajara Reporter, and the Puerto Vallarta Reporter. It may be useful for readers to see this again. I plan to follow this up with an updated account tomorrow regarding how what I do and why I do it has evolved.) 

As you may have heard, the Lake Chapala Reporter is now 10 years old, a big milestone for me and, I hope, for you, too.

I normally do not run retrospectives, but I want to remind you of what still fires me up after all these years. It has not always been smooth sailing, as you may also have heard. I have been accused of all manner of high-jinx, and I still get hate mail for even being in existence. So, why do I persist? Because the truth matters.

I wrote the following article in June of 2014, and I don’t know who I’m (still) madder at, the local real estate industry or The (old) Guadalajara Reporter. That’s why I started the new Guadalajara Reporter and then the Puerto Vallarta Reporter, in addition to the Lake Chapala Reporter.

I have no employees, no reporters, no contract people, no web developers, no advertisers, no customer service people. I’m it. Seven days a week. I don’t take vacations. I don’t even live in Mexico anymore. There have been too many journalists killed there. I moved to my home country of Denmark in March of 2021. But, I still persist. Why?

Read for yourself. This is what drives me. Still.

GUILTY!

While local real estate agencies, owners, and agents have been in damage-control mode, spinning tall tales to the public (and especially to their clients) about Real Estategate ever since the Lake Chapala Reporter scooped this story last August, the Mexican government commission on economic competition, COFECE, has given its final ruling on the matter: Guilty as charged: guilty of running an absolute price fixing monopoly. No other appeals or amparos (injunctions) will be entertained.

The heart of this racket consisted of forming real estate association groups (clubs) whose bylaws mandated that members had to charge at least 7% in sales commissions in order to list real estate on the group’s coveted multiple listing service (MLS). Those real estate agencies, owners, brokers, and agents who refused to participate in this scam were excluded from posting real estate on the MLS. The result, as decided by COFECE, was an illegal real estate price fixing monopoly in the Lake Chapala area between the years 2003 and 2007, and the deliberate cheating of largely elderly retirees out of millions of dollars of their life savings.

The guilty parties read like the Who’s Who of Lake Chapala’s real estate leaders.

SAT (Mexico’s tax department) is now aggressively pursuing the 28,973,299 pesos in fines levied against the guilty parties. This effort may be thwarted by some of the guilty parties having fled the country, some having transferred their assets to their children, and some having deliberately changed the names of their agencies and associations. For example, Dixie Nicholson changed Absolut Fenix to what it is now: Fenix. This represents a double crime: participating in the original scam, and then hiding assets from the government’s tax agency.

The full details of this ruling can be found on COFECE’s website  https://www.cofece.mx/conocenos/pleno/resoluciones-y-opiniones/. Click on this link and enter, for instance, Dixie in the search field Palabra Clave (key word), and click the Buscar button. The result will show case number DE-019-2007. The documents are all available there.

The real estate community can no longer hide the ugly truth of the Real Estategate scandal. It will undoubtedly try more damage-control maneuvers and fast talking. But the truth is in black and white for anyone to see who wishes to confront the guilty with the facts.

Case DE-019-2007 covered abuses between the years 2003 and 2007. A COFECE lawyer who has worked on the case is very interested in opening a new case covering subsequent years, since it appears the abuses have continued. Laws have changed in the meantime, permitting prison penalties in addition to fines to be imposed. This could have the effect of additional real estate office closings and additional people fleeing the country.

People involved in real estate, at any level, would do well to look themselves in the mirror and ask themselves how they can in good conscience, knowingly continue to participate in the most heinous scam their community has ever known. And if they choose not to look in the mirror, their families and friends would do well to confront them. No amount of money is worth the soul-destroying shame of ripping off their neighbors of millions of dollars. Those millions of dollars of dirty money have financed enough power to even intimidate the weekly publication Guadalajara Reporter into keeping quiet about their misconduct, threatening it with expensive lawsuits that could close it down because that’s what pulling all their ads would undoubtedly do. This is what mafias do.

If everyone confronted them and boycotted them and their other holdings, they would be out of business, and a cancer in this community would be eradicated.

Any real estate person refusing to negotiate a sales commission of a house below 7%, or a lot below 10%, is suspect. The norms are 5% and 7%, respectively.

What you don’t know CAN hurt you, and it’s journalism’s job to tell you the truth.