About $40m from as many as 158 bank accounts belonging to American expats have disappeared from Mexico's Monex, one of the largest international foreign exchange firms offering forex.
The scandal has upended the expatriate community in San Miguel, a city of 69,000 about 500 miles south of McAllen, Texas. Monex, with its stalwart reputation and international presence, was trusted by the San Miguel de Allende US retirement community, as was the company's representative, banker Marcel Zavala Taylor.
Taylor is the daughter of the town's former mayor, Manuel Zavala. Monex has said an investigation into Zavala in under way and legal action is continuing, but no details are forthcoming.
When they told us we had 6 pesos [32¢] in our accounts, I just felt sick to my stomach"
Most of the victims of the scam are retired expats that as non-Mexicans have very few rights or legal protection. Without answers, some have resorted to selling their assets and furniture to pay the bills as they wait to get the money back.
A dozen people interviewed by Bloomberg said that bank statements Zavala sent them purporting to show full accounts were apparently falsified. Most say the bank has told them little since they filed complaints, and some say Monex tried to settle for far less than the balances owed.
"This is a fraud that has affected both foreigners and locals. I know of many Mexicans that were caught in this, most of them from San Miguel de Allende. Unfortunately, this is affecting a lot of people, mostly retirees that now have no way to recover their money," Francisco Garay, head of Economic Development at San Miguel de Allende's town hall.
Interior designer Kathy Machir and her husband lost $625,000. "When they told us we had 6 pesos [32¢] in our accounts, I just felt sick to my stomach," Kathy Machir says. "Since then, they have not dealt with us in good faith."
Kenneth Karger, a retired dentist in Fort Worth with property in Mexico, says Monex owes him about $400,000. He stopped getting full statements after June, as did the Machirs. Karger says Zavala told him Monex was changing to a new online banking system and sent emails showing a plausible balance. Later, Karger went through statements he retrieved from Monex and found unauthorized withdrawals and wire transfers.
The bank has settled with some customers, but for less than they think they were owed. Cory Gray, 86, told Bloomberg she opened a Monex account six years ago and has recently had a tough time getting regular statements. She last heard from Zavala on Dec. 18 and was later told by Monex that she has next to nothing in her account. Monex offered her 70¢ on the dollar. She took it, afraid that fighting Monex would leave her with no cash. "I thought I would get nothing," Gray said. "That's why I settled."