Real Estate Dispute in Laguna Beach: Arbitration and Allegations

Laguna Beach real estate mogul Mohammad Honarkar faced financial challenges during the pandemic, prompting him to seek help from a local investor. This partnership did not end well, leading to the loss of most of his properties, including the historic Hotel Laguna. A public altercation at the hotel involved his security team and guards working for the investor.

Three years after these events, Honarkar has been awarded $1.34 billion in arbitration against the investor, Mahender Makhijani. The investor, based in Corona del Mar, was arrested on June 10 for alleged bank fraud relating to a $100-million loan default. Makhijani is expected to enter a plea soon, while his attorneys have declined to comment.

This high-profile dispute has affected the affluent seaside community, including business owners and residents. Honarkar’s extensive portfolio of hotels, shops, and restaurants was taken over by Makhijani. Shopkeeper Heidi Miller described the situation as a hostile takeover unprecedented in the area.

Makhijani, although not widely known beyond Orange County, built a successful business around distressed assets, attracting well-known local real estate investors. His lifestyle included luxury homes, exotic vehicles, and affiliations with prominent figures. However, federal authorities allege sinister underpinnings in his business operations, including the use of threats and deceptive practices.

Prosecutors accuse Makhijani of using shell companies and forged signatures to shield himself from litigation. Adding to his troubles, Makhijani allegedly falsified collateral documents for a $100-million loan from Western Alliance bank. The bank reported being a victim of fraud, while an employee of Makhijani indicated leniency from the bank due to its relationship with him.

Moreover, Makhijani reportedly hosted parties involving drugs and sex workers, attended by current or former bank employees. These accusations are reinforced by a dispute involving Honarkar that featured similar threats and force.

Honarkar, hopeful for restoration, feels justice has been served. He intends to recover his properties, including Hotel Laguna. His legal challenges stemmed from financial strains during the pandemic and a rough divorce. In 2021, he formed a joint venture with Makhijani, contributing ownership interests in various properties for financial support and loan refinancing.

He later discovered a $20-million loan taken out by the joint venture, unknowingly leveraging his properties. This revelation led to demands for records, sparking retaliation, including public campaigns against him.

Arbitration in 2023 sided with Honarkar, awarding him significant damages and legal fees due to fraudulent inducement and loss of property. An Orange County judge must confirm the award, while Makhijani’s attorneys seek to overturn it.

Meanwhile, Honarkar, hopeful to retrieve Hotel Laguna, faces a property managed by a receiver. He remains optimistic for a resolution after a prolonged legal battle.