2023 New York Laws › RPP - Real Property › Article 9-A - Subdivided Lands › 339-C - Action by Department of State.

§  339-c. Action by department of state. 1. Whenever the department of
  state shall believe from evidence satisfactory to it that  a  subdivider
  has engaged in, is engaged or is about to engage in any of the practices
  or  transactions  heretofore referred to as fraudulent practices, it may
  have an action brought in the manner hereinafter provided  in  the  name
  and  on  behalf  of  the  people  of  the state of New York against such
  subdivider and any other person or persons theretofore concerned  in  or
  in  any  way participating in or about to participate in such fraudulent
  practices, to enjoin such subdivider and such other  person  or  persons
  from  continuing  such fraudulent practices or engaging therein or doing
  any act or acts in furtherance thereof or, if the  department  of  state
  should believe from such evidence that such subdivider has or is engaged
  in  any such fraudulent practice, it may have included in such action an
  application to enjoin permanently such subdivider and such other  person
  or  persons  as  may  have  been  or may be concerned with or in any way
  participating in such fraudulent practice, from selling or offering  for
  sale  to  the public within this state, as principal, owner, subdivider,
  broker or agent or otherwise, any vacant land or lands. In  said  action
  an order or a judgment may be entered awarding the relief applied for or
  so  much  thereof  as  the  court may deem proper. Upon a showing by the
  department of state in the application  brought  in  its  behalf  for  a
  preliminary  injunction hereunder that the defendant named in the action
  or an officer thereof has refused to be sworn or to be  examined  or  to
  answer a material question or to produce a book or paper relevant to the
  inquiry  when  duly  ordered  so  to  do  by  the  officer or judge duly
  conducting an inquiry into the subject matter forming the basis  of  the
  application for such preliminary injunction, such refusal shall be prima
  facie  proof  that  such  defendant is or has been engaged in fraudulent
  practices as set forth in such application and a preliminary  injunction
  may  issue  from  the  supreme  court without any further showing by the
  department of state.
2. If the vacant land or lands  of  a  foreign  corporation,  company,
  association  or  non-resident  individual  are offered or advertised for
  sale within the  state  of  New  York  and  such  corporation,  company,
  association  or  non-resident  individual has not filed pursuant to laws
  heretofore or hereafter existing the designation of a person  upon  whom
  process  against  him  or  it  may  be  served or the designation of the
  secretary of state as such person pursuant to section two hundred ten of
  the general corporation  law  or  other  laws  heretofore  or  hereafter
  existing  or in lieu thereof, an instrument in writing duly acknowledged
  and filed in the office  of  the  secretary  of  state  designating  the
  secretary  of  state as the person upon whom may be served any subpoena,
  subpoena  duces  tecum  or  other  process  directed  to  such   foreign
  corporation,  company, association or non-resident individual and issued
  in any investigation, examination or proceeding pending or about  to  be
  instituted  under  and  pursuant  to  the  provisions of this article, a
  notice  may  be  served  upon  such  foreign  corporation,  company   or
  association,  or  upon  any  non-resident  officer  thereof,  or  upon a
  non-resident individual, by  mailing  the  same  in  a  securely  sealed
  postpaid  wrapper  addressed  to  such  foreign  corporation, company or
  association, or officer thereof, or non-resident individual, at  its  or
  his  last  known  place of business or residence, and may in such notice
  require that such foreign corporation, company or association,  or  such
  officer   thereof,   or   non-resident  individual,  furnish  a  written
  statement, verified as required in said notice, giving  the  information
  therein  specified relating to the vacant land or lands offered or to be
  offered in the state of New York by such foreign  corporation,  company,
  association or non-resident individual or, in the alternative, that such

  foreign  corporation,  company  or association, by its proper officer or
  officers,  or  such  non-resident  individual,  shall  appear  within  a
  reasonable  time  from  the  date of mailing such notice at a designated
  place  within  this  state for examination and shall produce at the time
  and place of such examination such books  and  papers  of  such  foreign
  corporation,  company, association or non-resident individual, as may be
  designated in such notice.
If such foreign corporation, company,  association,  or  such  officer
  thereof, or non-resident individual, shall fail to furnish the statement
  called  for  by such notice, or shall fail to appear pursuant thereto or
  to produce the books and papers required  thereby  to  be  produced,  or
  refuse  to  submit  to examination or to answer any proper question, the
  proof of such failure or refusal shall constitute prima  facie  evidence
  that  the  sale  or offering for sale or advertisement of vacant land or
  lands of such foreign corporation, company, association or  non-resident
  individual  constitutes a fraudulent practice within the meaning of this
  act and may in the discretion of the court be treated  as  a  sufficient
  basis  for  a  permanent  injunction  against  the  continuance  of such
  fraudulent practice.
3. In any action brought in behalf  of  the  department  of  state  as
  provided  in this article, the court at any stage of the proceedings may
  appoint a receiver of any and all property derived by the  defendant  or
  defendants  or  any  of  them by means of any such fraudulent practices,
  including also all property with which such property has been mingled if
  such property can not be identified in kind because of such commingling,
  together with any or all books of account and  papers  relating  to  the
  same.    The  judgment  entered  in  such  action  may provide that such
  receiver shall take title to any or  all  such  property  and  books  of
  account  and  papers relating to the same and liquidate such property or
  any part thereof for the benefit of all persons intervening in the  said
  action  and  establishing an interest in such property. The judgment may
  also provide that all such property, the title to or interest  in  which
  has  not  been established in such action by intervenors or otherwise by
  due process to be in  a  person  or  persons  other  than  defendant  or
  defendants,  shall  be  returned to the defendant or defendants as their
  interest may appear. Such receiver shall be subject to all the duties of
  receivers appointed in civil actions as far as practicable  except  that
  such  provisions  relating  to  commissions or compensation of receivers
  shall not be applicable to receivers appointed pursuant to this section,
  but such commissions or compensation shall be fixed by the court in  any
  amount  which  it  may determine to be just and equitable. In any action
  brought in behalf of the department of state as provided in this article
  the court may grant such other and further relief as may be proper.
4. Whenever the department of state  has  determined  to  commence  an
  action  under  this article, it may have the attorney-general present to
  any justice of the supreme  court,  before  beginning  such  action,  an
  application  in  writing  for  an  order directing the person or persons
  mentioned in the application to appear before the justice of the supreme
  court or referee designated in such order and answer such  questions  as
  may  be  put  to  them  or  to  any  of them, or to produce such papers,
  documents and books concerning the alleged fraudulent practices to which
  the action which  the  department  of  state  has  determined  to  bring
  relates, and it shall be the duty of the justice of the supreme court to
  whom  such  application for the order is made to grant such application.
  The application for such order may  simply  show  upon  information  and
  belief  that  the  testimony  of  such person or persons is material and
  necessary. The provisions of the civil practice law and rules,  relating
  to  an  application for an order for the examination of witnesses before

  the commencement of an action and  the  method  of  proceeding  on  such
  examination shall not apply except as herein prescribed. The order shall
  be  granted  by the justice of the supreme court to whom the application
  has  been made with such preliminary injunction or stay as may appear to
  such justice to be proper and expedient and shall specify the time  when
  and  place  where  the  witnesses are required to appear. The justice or
  referee may adjourn such examination from time  to  time  and  witnesses
  must  attend  accordingly.    The  testimony  of  each  witness  must be
  subscribed by him and all must be filed in the office of  the  clerk  of
  the county in which such order for examination is filed.
5. The order for such examination must be signed by the justice making
  it  and  service of a copy thereof with an endorsement by the department
  of state or the attorney-general, to the effect that  the  person  named
  therein  is required to appear and be examined at the time and place and
  before the justice and referee specified in such endorsement,  shall  be
  sufficient  notice for the attendance of witnesses, such endorsement may
  contain a clause requiring such person to produce  at  such  examination
  all  books,  papers and documents in his possession or under his control
  relating to the subject of such examination. The order shall  be  served
  upon  the  person  named in the endorsement aforesaid by showing him the
  original order and delivering to and leaving with him at the same time a
  copy thereof, endorsed as above provided, and by paying or tendering  to
  him  the  fee allowed by law to witnesses subpoenaed to attend trials of
  civil actions in any court of record in this state.
6. The referee appointed as provided in this article possesses all the
  powers and is subject to all the duties of  a  referee  appointed  in  a
  civil  action,  so  far  as  practicable,  and may punish for contempt a
  witness duly served with the papers as prescribed in  this  article  for
  non-attendance or refusal to be sworn or to testify or to produce books,
  papers  and  documents  according  to  the  direction of the endorsement
  aforesaid, in the same manner and to the same extent  as  a  referee  to
  hear, try and determine an issue of fact or of law.
7.  The  provisions of the civil practice law and rules shall apply to
  all actions brought  under  this  article  except  as  herein  otherwise
  provided.
8.  If any person shall ask to be excused from testifying or producing
  any book, paper or other document before the department of state or  the
  attorney-general or his deputy, or other officer designated by it or him
  or  before  any  court,  or  magistrate,  or  referee,  upon  any trial,
  investigation or proceeding initiated by the department  of  state,  the
  attorney-general, district attorney, grand jury or court pursuant to the
  provisions  of  this  article upon the ground or for the reason that the
  testimony or evidence, documentary or otherwise,  required  of  him  may
  tend  to  incriminate him or convict him of crime or to subject him to a
  penalty or forfeiture, and shall  notwithstanding  be  directed  by  the
  court,  referee, magistrate or officer conducting the inquiry to testify
  or to produce such book, paper or document, he must none the less comply
  with such direction but  in  such  event  he  shall  not  thereafter  be
  prosecuted  or  subjected to any penalty or forfeiture for or on account
  of any transaction, matter or thing concerning which he was  ordered  to
  testify  or produce evidence, documentary or otherwise, pursuant thereto
  and no testimony so given or produced shall be received against him upon
  any criminal action, suit or proceeding, investigation,  inquisition  or
  inquiry.
Provided,  however,  no  person  so  testifying  shall  be exempt from
  prosecution or punishment for  any  perjury  committed  by  him  in  his
  testimony  given  as  herein  provided  for, nor shall immunity apply to
  corporations or to the officers as such.