Looks like some sort of Friedel-Crafts with BF3 as the Lewis acid. The dithiane can be converted to -CH2- with Raney Ni (or hydrazine), as said by pHarmacist.
R1 S---CH2
\ / \
C CH2 + Ra-Ni or H2N-NH2 ----> R1-CH2-R2
/ \ /
R2 S---CH2
Some more information on that reaction can be found on
http://www.tciamerica.com/news/newslib/94sum_a.htm
I don't completely see how MeS- interacts in the reaction though, how/why it leaves. I suggest there is formation of MeSH in the first step of the reaction? Anyway, as it looks related to Friedel-Crafts, I postulated the following mechanism:
(d-)
H2C---S S--Me F
/ \ / |
H2C C(d+) + (d+)B--F ---->
\ / \ |
H2C---S R F
Me
|
H2C---S S~~~BF3 H2C---S F
/ \ / / \ (+) |
H2C C ----> H2C C + MeS~~B--F
\ / \ \ / \ |
H2C---S R H2C---S R F
H2C---S R HC---CH
/ \ / (2) / \
H2C C ----* HC---C CH ---->
\ / (+) | | \ /
H2C---S *---> | C---CH
| /
HC---N
(3)
H2C---S R
/ \ /
H2C C H HC---CH
\ / \ / / \
H2C---S C---C CH --[MeS~BF3]-->
| \ /
| C---CH
| /
(+)C---N
/
H
H2C---S R
/ \ /
H2C C HC---CH
\ / \ / \
H2C---S C---C CH + BF3 + MeSH
| \ /
| C---CH
| /
HC---N
Theory: in the 2-methylthio-1,3-dithiane, there is one C atom bound by 3 sulphur atoms and an R group. S drains electrons from C, by which C ends up with a partial negative current. In this case, a Lewis acid (BF3) interacts with the methylthio group. I don't know exactly why the BF3 wouldn't interact with the dithiane S atoms... stereochemical factors, or a lower partial negative current, or... ? Anyway, MeS- is the leaving group and form some kind of complex with BF3 (don't think it can form a bond, since B can only form 3 sigma bonds according to hybridisation theorem). The dithiane carbonium ion can now interact with the indole structure, as shown in the sketch. But I think the carbonium ion can interact both on C2 and C3 of the indole. I show the reaction in the way you would like it most... 
. The hydrogen on C2 is "cought" by the MeS-BF3 complex, by which the indole derivative becomes a stable molecule and MeS-BF3 falls appart in MeSH and BF3. This is 100% theoretical, I might be selling you a bag of elephant dung as well... but as I look at this reaction, you'll end up with two alkylated indoles: one alkylated on C2, the other on C3.
Might be interesting as well:
[1] L Micouin, A Diez, J Castells, D Lopez, M Rubiralta, JC Quirion, HP Husson - Synthetic applications of 2-(1,3-dithian-2-yl)indoles V. Asymmetric synthesis of dasycarpidone-type indole alkaloids, Tetrahedron Lett 36 1693-1696.
[2] Seung-Hwa Baek, Chan-Nam Yook, and No-Yeun Park - Boron Trifluoride Etherate-Catalyzed Formation of 3,4,5,6-Tetrahydro-7-hydroxy-2-(1,3-dithian-2-yl)-9-alkyl-2,6-methano- 2H-1-benzoxocin Derivatives, Bulletin of the Korean Chemical Society 12(6) (1991) 633-635.
http://www.kcsnet.or.kr/publi/bul/bu91n6/633.pdf
PS: pi-bond in sketches not shown due to estetical considerations... you (should) know where they are
.
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