Brooklyn developer must repay $6M+ to condo buyers after illegal sales
Streetview of 427 Marcy Avenue © Google 2024
A Brooklyn condo developer who cheated tenants out of more than $6 million in down payments must repay the money and is banned from selling property in New York for six years. Attorney General Letitia James last week announced that the state secured the funds from 425 Marcy, LLC, and its principal, Ezra Unger, who she said unlawfully sold units and collected down payments for apartments in Williamsburg before he was legally permitted to do so. Unger then illegally used buyers’ down payments for various expenses instead of keeping the money in escrow.
James’ office launched an investigation into Unger’s business practices at the 17-story Williamsburg building at 427 Marcy Avenue after receiving a complaint that the developer had entered into contracts with buyers even though the Office of the Attorney General (OAG) had never accepted the building’s offering plan for filing.
Under the state’s Martin Act, condo developers must submit an offering plan to the OAG and have it accepted for filing before they can market or sell units. The law also requires developers to place buyers’ down payments in a separate escrow account and keep the funds there until the sale is completed.
These protections ensure that buyers can get their money back if a condo project does not move forward.
James’ investigation found that the developer had entered into contracts for 17 residential units, three commercial units, and three residential parking spaces, collecting a total of $6.715 million in down payments from residential buyers.
Unger did not place any of the funds in an escrow account and instead used the money for construction and other purposes.
According to a press release from the attorney general, Unger must pay up to $824,000 in penalties: $324,000 for selling units and parking spaces before the offering plan was accepted and $500,000 for failing to place buyers’ down payments in escrow.
However, The Real Deal reported that the OAG had suspended the $324,000 penalty and $450,000 of the $500,000 escrow-related penalty. The suspensions came after Unger filed a declaration last month stating that he does not have enough assets to cover his debts, does not own any real estate, and cannot access enough credit to satisfy his obligations.
The developer is also banned from marketing, offering for sale, or selling securities in or from New York for six years. Unger has acknowledged violating the Martin Act.
Under the settlement secured by James, buyers of the condo units can either walk away from their purchases and receive their original down payments plus interest or apply that amount as a credit toward purchasing the same unit once the new offering plan is accepted for filing.
Buyers who remain interested in purchasing their units will also receive additional protections if the new purchase price exceeds the price in their original contracts. The new developer must either return the buyers’ money or apply it as a credit within seven business days after the OAG accepts the new offering plan.
The investigation isn’t the first legal trouble Unger has faced. In 2021, DW Partners, the project’s lender, claimed in a foreclosure suit that Unger had defaulted on a $31 million loan. He was also sued by nearby bakery owner Aron Lebovits, who claimed he was the property’s true owner, according to The Real Deal.
In January 2023, a bankruptcy case was filed against Unger. As part of the proceedings, Unger lost his ownership interest in the company, and the building was sold to 33 Walton Holdings, LLC, which became the new developer of the condominium. The bankruptcy case concluded in April 2025.
“When New Yorkers hand over their hard-earned savings for a down payment on a home, that money is not a piggy bank for developers to raid,” James said. “This developer broke the law by taking money from families before it was legally allowed to sell these homes, then left them waiting for years with nothing to show for it.”
Questions have been raised about Unger’s claims of financial hardship, as the developer is reportedly in talks to buy Arkia, Israel’s second-largest airline. A source familiar with the matter told The Real Deal that Unger is not putting his own money into the deal but is acting as a broker for others in the community who are seeking to bid on the airline.
An OAG spokesperson said that while Unger has sworn that his statements about his finances are accurate, the office would pursue additional penalties and legal action if they are proven otherwise.
“Mr. Unger made sworn representations regarding his finances and, through counsel, has assured us that those representations remain accurate,” a spokesperson for the office said in a statement. “If his sworn statement proves to be false, [the office] may seek to recover the full penalty and pursue further legal action.”
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