Bankruptcies, Lawsuits And An AG Probe: A Prolific Brooklyn Developer's Downward Spiral

The six-story condo at 475 Washington Ave. in Clinton Hill in Brooklyn has become the center of a legal and financial storm.

Residents — a mix of natural wine merchants, artists, tech workers and rent-stabilized tenants — have filed at least four lawsuits against developer Louis Greco alleging fraud, self-dealing and failure to deliver on promised apartments.

Their legal efforts face new uncertainty after Silver Point Capital foreclosed on the property last month following a $35M loan default. The building is also under active investigation by the New York attorney general, according to documents obtained by Bisnow and confirmed by Greco.

Greco, founder of Second Development Services, has been developing residential and commercial projects in New York City for decades, but he has left behind a trail of lawsuits, building violations and burned buyers in his wake. 

Industry observers say his track record is all too common in the city's real estate scene — moving from one failed project to another, doubling down while dodging accountability.

Greco, who says he has developed more than 100 projects, and his company have been named in dozens of lawsuits over the past five years brought by buyers, partners, contractors and neighbors. Between the foreclosures, bankruptcies and judgments against him, Greco owes tens of millions of dollars to creditors around the city.

Public records and interviews with residents and investors reveal a pattern: unpaid workers, unresolved violations and unfulfilled promises.

Last year, Greco’s wife filed for bankruptcy after being sued over a personal guarantee tied to his debts.

“Unfortunately, many of my husband’s recent projects have failed,” she wrote in an affidavit.

Asked by Bisnow about the filing, Greco replied: “She was correct.”

The situation illustrates a broader challenge for New York condo buyers when developers neglect or dispute building violations.

“It all comes back to the captain of the ship,” said Stanley Stoll, CEO of forensic engineering firm Knott Laboratory. “You should be able to sell the units and avoid bankruptcy.”

Many sources spoke to Bisnow under condition of anonymity due to litigation or business ties with Greco.

SDS has previously been investigated by state prosecutors. Greco reached a $100K settlement with the attorney general's office in 2019 after being accused of failing to disclose his status as principal sponsor at 11 different condo developments totaling nearly 600 units across Manhattan and Brooklyn. However, his investments go far beyond those properties, and his history of abandoning contracts dates back over a decade.

He’s currently developing four different Brooklyn properties, including condos and a charter school, which have all been entangled in lawsuits. Greco declined to be interviewed, but in an email, he told Bisnow that all of the projects are in various stages of workout.

“Throughout the many cycles over the years, when I ran into difficulties, I always made the primary obligations to complete the project and get everyone paid,” he said.

‘Lenders Have Stopped Funding’

Greco got into real estate by chance.  

In 1979, he was working as a part-time contractor in Gowanus — now a developer boomtown — overseeing a distressed development while finishing his degree in civil engineering. At the time, he was also battling cancer and undergoing treatments, he said in an email. 

The work set Greco up to become one of the earlycomers to Brooklyn’s 2000s gentrification wave.

He was involved in the development of 1 Grand Army Plaza, known as On Prospect Park, as well as the Vos Hotel at 95 Rockwell Place. He also has a number of projects in Manhattan, including 22 Bond St., a six-unit condo building featuring a 10-foot-long insect sculpture that once garnered the attention of The New York Times.

However, even in those successful projects, Greco has incurred losses. 

In one case, he and his wife, alongside their business partner at On Prospect Park, settled a lawsuit, agreeing to pay $5M. But the Grecos never came through with their side of the bargain, and their partner went after them in court. A judge intervened last year to recover the funds.

In a deposition in January, Greco admitted that financial issues plague his portfolio, telling attorneys that “our contracts right now are pretty much on hold.”

“The jobs are over budget and lenders have stopped funding,” he said, claiming that the trouble “started with Covid,” according to a court filing.

In the deposition, Greco said lenders cut funding to his projects in 2022, 2023 and 2018, predating the pandemic. In the document, he said customers owe SDS between $75K and $100K.

In an email to Bisnow, Greco said he could not comment on specific projects but didn't refute that he’s run into financial issues.

“There have [been] instances where, when it became time to restart a project, prices were higher. Additionally, when projects are not moving, the interest keeps accumulating. The amount of the debt can cut into or eliminate remaining equity,” he wrote. “Lenders may require additional capital in order to fund. Sometimes the equity partners don’t fund, which adds an additional challenge to the circumstance.”

Greco added that the only prepandemic project that was not completed was because a neighboring building was undermined, halting construction. The lender eventually foreclosed, he said. 

The pandemic's effect on construction has given some of his investors sympathy for his situation, even as their payouts have been delayed.

“Once you start having financial problems with a project, it is customary for the banks to stop funding, the interest starts accruing,” one of Greco's investors told Bisnow. “It’s hard to get out of that trap.”

Though that’s not the only issue, he acknowledged. 

“I think it's bad management and bad luck,” the investor said.

Empty Lots And Half-Built Buildings

At one of the sites Greco says he is actively involved in building, no work has taken place for years.

Empty cigarette packs and rotting wooden boards litter the sidewalk in front of 156-160 17th St. in Brooklyn’s South Slope. Weeds grow amid the abandoned rebar and faded notices of Department of Buildings permits and violations are taped to the graffiti-covered walls that hide the deserted lot from view. 

DOB issued a stop-work order on the project, where SDS planned to build a nine-story charter school, in September 2023. Residents on the block told Bisnow that they couldn’t remember when workers were last seen there. 

The property is just around the corner from the Prospect Avenue subway station, which thrums with commuters exiting the R train from Manhattan during rush hour.

“I wish they did something with it,” said one neighbor. “The block could use it.”

In 2021, SDS was excavating the site when workers damaged the building next door, according to a lawsuit filed last year. Fissures and widening cracks allegedly spread across the neighbor’s interior and exterior, hitting heat pipes and flooding the basement.

The resulting damages caused two tenants to evacuate their apartments, according to the complaint. 

“It was the neighbor that undermined our structure at the time,” Greco said in an email, adding that there are ongoing matters at the site.

It’s one of several unfinished SDS projects scattered across Brooklyn. 

In 2014, Greco filed plans for an 11-unit building at 63 Columbia St. near the Cobble Hill waterfront. After seven years of construction, approximately 80% of the project was off the ground, according to court records.

Greco believed that the project could sell out for $25M, but in September 2023, it was appraised at $11.1M. Romspen, which lent $14.7M to SDS, filed to foreclose.

But on the eve of the foreclosure sale, Greco put the condo project into bankruptcy protection. In bankruptcy filings, he claimed he needed another $3.5M to get it across the finish line and accused the senior lender of “playing Russian roulette with its collateral” in delaying the project. 

Since then, the court approved a plan of reorganization and the senior lender is funding the project’s completion, Greco told Bisnow. It is still under construction.

But that isn’t the only battle at 63 Columbia. At least three lawsuits have been filed against SDS, two of which are still active. In court filings from 2015, 2021 and 2023, contractors said that Greco owed them a total of $290K.

Bisnow found six other lawsuits have been filed by contractors and employees within the past five years accusing Greco of not paying them for various projects. 

That includes 232-40 Smith St., a planned retail building that was the subject of at least seven lawsuits filed between 2018 and 2021. Greco bought the empty lot in 2015. 

In some legal complaints, contractors have sought to recoup roughly $373K combined. In others, plaintiffs allege negligence during the construction process damaged neighboring properties. 

Greco himself has sued his insurer there, seeking coverage for damage done by workers. He told Bisnow that SDS worked with the DOB to resolve issues at the site.

Lender North Hill Capital Management sued SDS in 2020, claiming that the developer missed payments and the project’s completion deadline had passed. North Hill also doubled down on allegations that the construction firm engaged in unsafe practices. It eventually won a nearly $31M judgment and foreclosed on the property. 

As of October, Google Maps shows that the lot remains empty. 

Buyer Beware

In 2021, residents started closing on the 60 units at SDS’ 475 Washington. Soon after, they began finding that items promised in their contracts were missing and structural deficiencies afflict the former tenement building, according to three lawsuits filed in 2024 and 2025. There have been 72 violations against the building, 12 of which are active, according to the DOB. 

In one demand letter, a buyer alleged that railings were installed upside down, floors were damaged and walls had dents and scuffs. The total cost of repairs neared $273K, according to a filing. Another lawsuit details a similar $200K punch list.

In interviews, two residents said the building lacks guaranteed security, which resulted in a break-in. A police complaint filed last year confirms there was a criminal trespassing reported at the building.

In a lawsuit filed last year, which has since been settled, 21 residents at 475 Washington sued over construction defects and accused management of refusing to turn over condo board control. As a result, the residents have not been able to access the building’s financial records, they said.

The residents point to a case where a former property manager, who was a sponsor’s son, invested the building’s reserve fund in companies he was affiliated with, according to the complaint and an amended offering plan. After finding out, Greco forced the manager to return the funds.

Attorney Michael Jagiani, who is not involved in litigation concerning SDS, said that a lack of transparency among condo boards is not uncommon, especially soon after construction. When units begin selling, the board may be filled with people favorable to the developer.

Still influenced by the developer, the board can then opt for “patchwork repairs” for structural issues, he said.

“Over time, the developer’s representatives aren't on the board anymore,” Jagiani said. “They still have all these problems, and they can't sue anyone.”

At 475 Washington, several buyers, feeling burned, have been left in limbo as the building has been foreclosed on.

“We walked into our purchase contract with our eyes open and a lot of research, including our own lawyer,” one first-time homebuyer told Bisnow. “We understood that New York City real estate is a blood sport, but this is above and beyond.”

Residents at other buildings have similarly teamed up against SDS.

In 2016, the board of managers of 78-80 Leonard St. in Tribeca accused Greco of fraudulently selling apartments that were hazardous. Among the violations cited were a defective boiler, elevator and sprinkler system.

The condo board filed liens against the building’s units to recover their losses. However, the building was put in bankruptcy, dodging foreclosure.

Greco said that the building was a conversion project with a buyer-beware provision. The litigation has since been settled and he said he is no longer involved in the project. 

The lawsuits that Bisnow examined are all in various stages, including several that have been settled or resolved otherwise.

Speaking generally, Jagiani said that developers may move forward on projects even when they know about deficiencies. However, they can be shielded by LLCs and statutes of limitations that prevent residents from recovering any losses.

“These guys know what they're doing,” Jagiani said, speaking generally. “They see these issues long before the residents, unfortunately.”

But jilted buyers might be the least of Greco's concerns. 

The attorney general has opened another investigation into the developer, according to sources and an email viewed by Bisnow. The reason for the investigation is unclear.

Greco confirmed that he is being investigated by the attorney general's office but didn't comment further. The attorney general's office didn't respond to Bisnow's requests for comment.

In her bankruptcy filing, Linda Greco claimed nearly $26M in assets and $35M in liabilities. In addition to investors and condo boards, her creditors include the Internal Revenue Service and the New York State Department of Taxation and Finance, with $3.2M in claims, as well as American Express and Chase Visa for at least $248K in unpaid credit card purchases.

“The bankruptcy is proceeding. It has little impact on my business,” Louis Greco said in an email. 

Additionally, the IRS has filed a $39K tax lien against his home. Greco said that the issue is “being dealt with.”

Outside experts say that the slow-motion free fall is not surprising.

“It just takes forever to get through that process and to the point where you actually understand that there's deficiencies or things that aren't right. And then to have multiple projects that you need to say, ‘Oh, that wasn't just one time,’” Stoll said. “It takes that time for everybody to paint the picture of what's really going on.”