California financier arrested for $100 million bank fraud

• Key insight: The alleged culprit faces federal charges of bank fraud and explicitly falsifying loan documents to secure a warehouse line of credit.  
• What's at stake: Multiple banks have become ensnared in Mahender Makhijani's alleged misdeeds — not only Western Alliance, but also Zions Bancorp. and Preferred Bank.
• Forward look:  If Makhijani is convicted, he faces a maximum sentence of 30 years in prison, according to prosecutors,

The Department of Justice arrested and charged an Orange County, Calif., man with allegedly committing a $100 million-dollar bank fraud against Western Alliance Bancorp. 

Mahender Makhijani, 44, of Corona del Mar, was arrested at his home Wednesday morning by federal agents and charged with bank fraud and falsifying loan documents. 

The indictment doesn't name Western Alliance as the bank that was victimized, but multiple sources confirmed Thursday that the Phoenix-based bank is the lender described by prosecutors.

In August, Western Alliance sued Cantor Group V, an entity linked to Makhijani, alleging fraud related to commercial real estate loans and their cash proceeds. Western Alliance's disclosure of the alleged fraud last fall spurred fears of more widespread credit problems throughout the banking sector.

Western Alliance said Thursday that it didn't have a response to the DOJ's criminal complaint. The bank stated on its quarterly earnings call in April that it believes "recoveries on this loan will be realized in the future from multiple sources," Stephanie Whitlow, Western Alliance's chief marketing officer, noted in an email.

Prosecutors allege that Makhijani was a financier who falsified loan documents and title insurance reports on multiple properties owned by other investors to make it appear as if his company held first-liens on a portfolio of real estate loans. In related civil cases, investors have claimed they were defrauded by Makhijani, and some have accused him of making threats against them.

Brandon Tran, a lawyer for the entities that are defendants in civil cases, told American Banker last year that his clients "vehemently deny all the allegations of wrongdoing," calling the claims "unfounded."

If convicted of the criminal charges, Makhijani faces a maximum sentence of 30 years in federal prison, the DOJ said.

The case against Makhijani has drawn significant media attention for allegations of raucous parties held by the defendant, and for clashes in 2023 between private, armed security guards at two Laguna Beach hotels. The clashes were over ownership of the hotels through a joint venture that has become embroiled in civil disputes.

In the criminal complaint, prosecutors indicated that Makhijani led a lavish lifestyle, pointing to "his use of private jets, two adjacent multi-million dollar homes" in Corona Del Mar, California, and a luxury apartment near Fashion Island in Newport Beach, California. The indictment also called attention to Makhijani's "use of luxury vehicles, including a Bentley, Porsche, and Mercedes G-Wagon, as well as the vast sums of money that plaintiffs allege to have lost in multiple lawsuits."

More than 100 individual investors have been defrauded by Makhijani, said Albro L. Lundy III, partner and trial lawyer at Baker, Burton & Lundy, in Los Angeles, who represents six investors in civil suits against Makhijani. 

"It was a fraud on banks and individual investors," Lundy told American Banker. "He encumbered properties owned by other investors, and couldn't keep the fraud going because it was similar to a Ponzi scheme."

Makhijani used the assets of two major investors as guarantors on a warehouse line from Western Alliance, Lundy said. 

Zions Bancorp in Salt Lake City and Preferred Bank in Los Angeles have also been entangled with Makhijani-linked entities.

Zions said last year that it was alleging fraud through litigation, and that it was seeking to recover $60 million.

In May, Lundy separately sued both Western Alliance and California Bank & Trust, a wholly-owned division of Zions, on behalf of an investor, alleging that loan advances were given to Cantor V, one of Makhijani's companies, that were ineligible due to loan agreements. The lawsuits allege the banks made loan advances that were a consequence of "gross negligence or intentional malfeasance."

Meanwhile, Preferred said in February that it downgraded to nonaccrual status a large relationship involving $115 million of loans backed by multifamily and commercial real estate properties.

Makhijani had been out of the country for the past month and only returned in the past week, when prosecutors arrested him, Lundy said.

Makhijani controlled two Newport Beach companies, Cantor V and Continuum Analytics, that an arbitrator found last month had breached financial agreements.

The arbitrator, retired judge David A. Thompson, awarded $1.34 billion to a Laguna Beach businessman, Mohammad Honarkar, who alleged that Makhijani "fraudulently induced" him into a real estate joint venture.

"The award reflects both the scale of the real estate portfolio involved and the years of litigation required to uncover the full scope of the misconduct," said Aaron May, a partner at the law firm Halpern May Ybarra Gelberg. That dispute arose from a 2021 joint venture in which Honarkar agreed to contribute interests in multiple commercial properties in exchange for a promised $30 million equity contribution and refinancing support from entities affiliated with Makhijani.

About two dozen properties in Southern California, including Hotel Laguna, a well-known Spanish-style hotel on Pacific Coast Highway in Laguna Beach, that were part of Makhijani's fraud on investors have fallen in foreclosure or receivership.

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In the criminal complaint, the Justice Department said Makhijani's company Cantor V, had a $25 million revolving warehouse line that was extended to $100 million for Makhijani to originate or buy mortgage loans, hold them temporarily as inventory and repay the advances or pay off the loans to then borrow against the base of eligible loans.

The pledged loans and cash proceeds are the collateral pledged to the bank, and Western Alliance believed it had first-lien priority.

Between September 2024 and April 2025, Makhijani doctored title insurance reports to falsely state that Cantor V was in the first-lien position on collateral pledged to Western Alliance in exchange for a warehouse line of credit, prosecutors allege.

The DOJ's 38-page criminal complaint states that a "review of bank records or analysis of such records has confirmed that Makhijani is involved in suspicious movement of funds that appear designed to conceal the source and nature of the funds." 

The criminal complaint also states that Makhijani has "significant foreign assets," including control over bank accounts in his native India.

"It was a huge scam," said Lundy, the attorney representing investors. "We are investigating how the banks allowed this to happen."