Bizarre bankruptcy stops Brooklyn condo project foreclosure

Bakery owner alleges partner victimized “simple people without any real education”

DW Partners David Warren and 427 Marcy Avenue (Getty, DW Partners, Google Maps)
DW Partners David Warren and 427 Marcy Avenue (Getty, DW Partners, Google Maps)

It’s one of the more bizarre real estate bankruptcies in recent memory.

The drama at a South Williamsburg condo project first came to light in 2021 when its lender, DW Partners, initiated a foreclosure, alleging that developer Ezra Unger defaulted on a $31 million loan.

Proceedings on the 25-unit condo project at 427 Marcy Avenue were delayed by lawsuits by Unger and a partner, nearby bakery owner Aron Lebovits. But Lebovits failed to pay a bond and the foreclosure resumed late last year.

Then, a day before the Jan. 17 sale was to take place, a bankruptcy filing stopped the clock. While most such filings are boilerplate, listing assets and liabilities, this was anything but.

For starters, the filing by 425 Marcy Avenue LLC bears Lebovits’ signature even though the entity is registered to Unger’s company, JNY Capital. Lebovits explains this in court papers by claiming that Unger “systematically looted Lebovits’ property using a series of fraudulent and forged documents.”

Another oddity is that Lebovits affiliated the case with a separate bankruptcy, that of Cincinnati Terrace Associates LLC. Lebovits claims he has no ties to the LLC but listed it as an affiliate because “Unger stole money from the debtor and put it into the Cincinnati deal.”

That’s just the start.

Lebovits’ filing also said the $31.5 million loan from DW Partners was unsecured and fraudulent.

Adam Stein-Sapir, a bankruptcy expert not involved in the case, said deeming a loan unsecured in a bankruptcy filing is unusual.

“Typically the debtor would just schedule the loan as secured and fight it later,” he said, adding that “the [bankruptcy] schedules are not supposed to be a work of advocacy.”

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The filing gets weirder. Lebovits goes into great detail about who paid the bankruptcy attorney’s $42,000 retainer fee. He appears to have passed the hat to his family members to come up with it.

He first mentions Binyomin Lebovits paid $10,300, including $300 in credit card transaction fees. Then Sarah Lebovits contributed $3,500, Biyomin Lebovits $4,000, Judy Lebovits $2,238 and Fradel Lebovits $2,000. Williamsburg-based property manager Regal Management Services kicked in $15,000, and Congregation Beis Nusen added $5,000, according to the filing.

“I have never seen that before,” said Stein-Sapir.

Lebovits has been fighting Unger and DW Partners in civil court, alleging that Unger has taken advantage of “simple people without any real education.” Lebovits claims he was the true owner of the property and partnered with Unger on the condo development only for Unger to saddle the project with debt and move money into a project in Cincinnati.

Unger dismissed Lebovits’ allegations, asserting that he paid Lebovits millions of dollars.

The judge initially delayed the foreclosure because of lawsuits, and Unger’s attorneys asked for the dispute to be resolved in religious court.

“The investor agreements are sworn to before God, subject to religious law, and may only be interpreted and contested in the religious courts known as the Beth Din,” wrote Morrison Cohen attorneys Latisha Thompson and Y. David Scharf.

A judge paused the foreclosure, but required Lebovits to pay a $1.5 million bond within seven days. Lebovits never did.

The foreclosure resumed — until Lebovits filed another lawsuit in December, seeking an injunction. A judge denied the attempt.

Lebovits, however, was able to delay the foreclosure again with the latest bankruptcy filing. The sale was called off.

Neither Lebovits nor his attorney returned a request to comment. Unger and DW Partners also did not return a request for comment.