The man who made Jamie Dimon worry about a wave of commercial mortgage fraud is a California multifamily player and big-time Republican donor, Gerald Marcil, who is now facing serious legal allegations.
Marcil was among the defendants named in a complaint filed in Los Angeles County Superior Court this week accusing the investor of manipulating loan structures that left Zions Bancorporation and Western Alliance Bancorporation out in the cold when properties tied to their financing went bust, Bloomberg reported.
Zions subsidiary California Bank & Trust claims it lent more than $60 million to an investor group that listed 16 properties as collateral; six of those assets were investments under Newport Beach-based limited liability company MOM CA Investco, which filed for bankruptcy in February.
When California Bank & Trust underwrote the loans in 2016 and 2017, the company ensured it enjoyed lender protections, namely that it would be first in line for repayment if the borrower defaulted and liquidated its assets.
San Diego-based California Bank & Trust said it later discovered other lenders actually held liens on several of those same buildings, thus rendering Zions’ protection obsolete when the assets went into liquidation.
Phoenix-based Western Alliance Bancorp filed a similar complaint in August, saying the same investor group, led by Gerald Marcil, Andrew Stupin and Deba Shyam, owes it nearly $99 million. The bank alleges the group hid the fact that some of the collateral properties were already in foreclosure, in turn undermining the bank’s repayment rights.
MOM CA Investco was launched in 2021 by Mohammad Honarkar and Mahender Makhijani. At the time, Makhijani acquired and managed distressed real estate for investors through an entity called Continuum Analytics. Marcil and Stupin were among Continuum’s largest investors, while Shyam is its legal owner.
The relationship fell apart after Honarkar accused his partners of fraud. Makhijani at one point used armed guards to take over some of the properties and reportedly hired mobile billboards to drive around Laguna Beach displaying pictures of Honarkar and accusing him and two city employees of corruption.
The firm’s Chapter 11 bankruptcy case, which covered a hotel in Laguna Beach and a $65 million apartment complex in Redlands, was dismissed in August after the parties failed to reach a restructuring deal.
JPMorgan Chase CEO Jamie Dimon is keeping a close eye on the market as regional banks are tied to borrowers accused of fraud.
“My antenna goes up when things like that happen,” Dimon told analysts on a call this week, per CNN. “And I probably shouldn’t say this, but when you see one cockroach, there are probably more… Everyone should be forewarned on this.”
Marcil and Stupin contest the charges.
“My clients vehemently deny all the allegations of wrongdoing,” Brandon Tran, an attorney representing Marcil and Stupin, told Bloomberg. “These claims are unfounded and misrepresent the facts. We are confident that once all the evidence is presented, our clients will be fully vindicated.”
— Chris Malone Méndez
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