Laguna Beach Real Estate Dispute Ends with $1.34 Billion Award

Financial Struggles and the Formation of a Joint Venture

During the pandemic, real estate investor Mohammad Honarkar faced financial difficulties. In need of assistance, he partnered with local investor Mahender Makhijani. However, their joint venture collapsed, resulting in Honarkar losing control of several properties, including the iconic Hotel Laguna. By 2023, tensions escalated to physical confrontations at the hotel, involving security teams from both parties.

Arbitration and Legal Battles

Three years after losing his properties, Honarkar received a $1.34 billion arbitration award against Makhijani. Federal authorities arrested Makhijani for alleged bank fraud relating to a $100-million loan default. Currently detained, he is expected to enter a plea in early July. Honarkar’s legal representatives have described the situation as one of Southern California’s largest real estate scandals.

“I don’t recall anything like that ever happening where people felt the need for armed guards in a dozen properties throughout Laguna Beach,” said Heidi Miller, a long-time shopkeeper in the area.

Makhijani’s Business Practices

Makhijani, a businessman from Corona del Mar, built a successful distressed-assets business over a decade but allegedly employed threatening tactics. Authorities revealed his use of shell companies and false documentation to protect his interests and deceive banks. He reportedly secured a fraudulent $100-million loan using falsified collateral.

The Arbitration Outcome

The arbitration addressed Honarkar’s claims of fraud and breach of contract against Makhijani, while Makhijani accused Honarkar of interference and trespassing. In 2025, arbitrator David Thompson sided with Honarkar, granting him $1.34 billion for property losses and damages. Thompson concluded that Honarkar was misled into the venture, resulting in significant financial harm.

Compounding the situation, evidence showed that Makhijani and associates collected rents but defaulted on loans and taxes, severely depleting the venture’s assets.

Nano Bank’s Involvement

Nano Bank, which referred Honarkar to Makhijani, was found liable for fraud related to an undisclosed $20-million loan. A separate settlement was reached between Nano Bank and Honarkar.

Future Steps

To enforce the award, Honarkar’s legal team is working to identify and recover Makhijani’s assets domestically and internationally. Meanwhile, Hotel Laguna is under a receiver’s management, yet Honarkar remains hopeful about reacquiring and completing its renovation.

Although the $1.34 billion arbitration award requires confirmation by an Orange County Superior Court judge, the case continues shaping Honarkar’s efforts towards recovery.