Signed contract to sublet a place from September til December, paid security. Now the guy says his landlord actually doesn't allow him to sublet his apartment. Options?

It's an apartment in Chinatown, the guy we're renting it from works as a real estate agent in NYC. I believe the place we would be renting is the one he lives in himself, so not one he deals with as an agent. He had just broken out a wall when we went to see the place, he said he'd have the place fixed up by the time we moved in, so something tells me he actually lives there.

He mentioned the landlord threatened him with eviction if he were to sublet his place. He's going to try to convince him to allow the deal to go through, if he doesn't budge he'll give us back the security we paid.

Are we being duped? How does a real estate agent not know the terms of the contract he signed with his landlord? Should we be asking for compensation in one form or another, either cash or 3 months for the same price in a place he deals with?