Laguna Beach real estate mogul Mohammad Honarkar faced financial difficulties during the pandemic and reached out to a local investor for assistance. The joint venture established with the investor quickly unraveled, resulting in Honarkar losing control of most of his properties, including the historic Hotel Laguna. In 2023, a public confrontation occurred at the hotel between Honarkar’s security team and guards employed by his partner to seize control.
Three years later, Honarkar emerged victorious with a $1.34 billion arbitration award against the investor, Mahender Makhijani of Corona del Mar, who was arrested on June 10 for alleged bank fraud involving a $100 million loan default. Makhijani, currently in custody, is set to enter a plea on July 6. Last week, Makhijani’s criminal defense attorneys refrained from commenting.
“I don’t recall anything like that ever happening where people felt the need for armed guards in a dozen properties throughout Laguna Beach,” remarked Heidi Miller, a 71-year-old shopkeeper renting from Honarkar.
The business dispute stirred the affluent seaside community, where Honarkar owned a portfolio that included hotels, shops, restaurants, and vacation rentals, later taken over by Makhijani and his associates. Footage of the May 2023 confrontation involving Makhijani at Hotel Laguna is included in a federal court complaint.
While Makhijani was mainly known within Orange County real estate circles, he established a thriving distressed-assets business over a decade, attracting prominent Southern California real estate investors. His business supported a lavish lifestyle with multimillion-dollar residences, a luxury apartment, and exotic vehicles. Prosecutors believe Makhijani’s assets might be held in others’ names or located in India.
Federal authorities contend that Makhijani’s business relied on more sinister means, using threats of violence against adversaries. He employed shell companies and strawmen to sign documents on his behalf, serving as operators of his companies.
“When criminals are allowed to deceive lenders, the spillover effects can harm consumers and businesses,” stated First Assistant U.S. Attorney Bill Essayli.
Prosecutors allege Makhijani arranged for fraudulent collateral for a $100 million commercial loan, falsifying documents to show the bank, Arizona-based Western Alliance, had first lien rights if the loan failed. A company spokesperson confirmed, “Western Alliance was the victim of fraud.”
Makhijani allegedly hosted parties with sex workers and drugs attended by current or former bank employees. The affidavit references a dispute with a businessman, likely describing the situation with Honarkar.
Honarkar, an Iranian immigrant and UC Irvine graduate, initially amassed wealth through a cellular phone retailer sold to Verizon in 2016, later amassing a real estate portfolio. He bought Hotel Laguna in 2019 and initiated renovations, but the pandemic and personal challenges impacted his finances. Unable to pay a $195 million loan, he sought financing from Nano Bank and was subsequently referred to Makhijani.
In 2021, Honarkar entered a joint venture, contributing ownership interests in several properties for $30 million in capital, with Makhijani promising refinancing for the loan. Unknown to Honarkar, a $20 million loan was taken out by the joint venture, secured by his properties.
“Obviously I feel justice finally came true. I went through a really difficult time to prove my case.”
Honarkar’s inquiries into the joint venture’s operations revealed numerous transactions involving his properties without his awareness, sparking retaliation. Events included a mobile billboard featuring his photo and a word “CORRUPTION??,” altercations at Hotel Laguna, and armed individuals seizing a restaurant at the Laguna Beach Festival of Arts.
With the dispute sent to arbitration, Honarkar accused partners of fraud and other wrongdoing. In May 2025, arbitrator David Thompson favored Honarkar, granting him legal fees and damages. The arbitration award must be confirmed by an Orange County judge.
Aaron May, Honarkar’s attorney, expressed plans to pursue reclaiming his client’s properties and locating Makhijani’s assets in the United States and India. The Hotel Laguna property is under a receiver’s management, but Honarkar remains hopeful about repurchasing and completing renovations.
“For five years of my life I’ve dealt with this nonsense.”