2006 New York Code - Action By The Department Of Law.

 
    §  689.  Action  by  the department of law. 1. Whenever the department
  shall believe from evidence satisfactory  to  it  that  any  person  has
  engaged  in  or  is  engaged in or is about to engage in any practice or
  transaction heretofore referred to as and declared to be an unlawful  or
  a  fraudulent practice, it may bring an action in the name and on behalf
  of the people of the state of New York against such person and any other
  person theretofore concerned in or in  any  way  participating  in  such
  unlawful  or  fraudulent practice, to enjoin such person or persons from
  continuing such unlawful and fraudulent practice or engaging therein  or
  doing  any  act  or  acts  in  furtherance thereof or, if the department
  should believe from such evidence that such person actually  has  or  is
  engaged  in  any such unlawful or fraudulent practice, it may include in
  such action an application to enjoin permanently such  person  and  such
  other  person  as  may  have been or may be concerned with or in any way
  participating in such unlawful or fraudulent practice, from  selling  or
  offering  for  sale  within  or from this state as franchisor, franchise
  sales agent, franchise salesman, or a principal thereof,  any  franchise
  offered  or to be offered or sold, or from continuing any such practice.
  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 in its application for a permanent 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 to do so by the officer or judge duly conducting an inquiry into
  the subject matter  forming  the  basis  of  the  application  for  such
  injunction,  such refusal shall be prima facie proof that such defendant
  is or has engaged in an unlawful or fraudulent practice as set forth  in
  such  application  and a permanent injunction may issue from the supreme
  court without further showing by the department. In  an  action  brought
  under  this  section  the  court may award to the plaintiff a sum not in
  excess of ten thousand dollars  for  each  defendant  as  an  additional
  allowance.
    2.  Upon  a  showing  by  the  department,  in  an  application for an
  injunction, that any person engaged in the offer or sale of a  franchise
  in  this  state  has  ever  been  convicted  by  a  court  of  competent
  jurisdiction in any state or county  of  any  felony  or  of  any  other
  criminal  offense  by  any  such  court,  whether  or not constituting a
  felony, involving franchises, securities or subdivided land, the supreme
  court after a hearing may issue  a  permanent  injunction  awarding  the
  relief  applied  for,  or  so much thereof as the court may deem proper,
  against such person shown to have been so convicted,  in  the  form  and
  manner  provided  for  in subdivision one of this section in the case of
  one who actually has  or  is  engaged  in  any  unlawful  or  fraudulent
  practice.
    3. If a franchise is offered or sold within the state of New York by a
  non-resident  person and such non-resident person 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  thirteen
  hundred four of the business 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
  non-resident person and issued  in  any  investigation,  examination  or
  proceeding  pending  or about to be instituted under and pursuant to the
  provisions of this article, the department may serve a notice upon  such
  non-resident  person  by  mailing the same in a securely sealed postpaid
  wrapper addressed to such non-resident person at its or his  last  known
  place of business or residence, and may in such notice require that such
  non-resident  person furnish a written statement under oath, as required
  in said notice, giving the information therein specified relating to the
  franchise offered, to be offered or sold in the state  of  New  York  by
  such  non-resident person or, in the alternative, that such non-resident
  person 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 non-resident person as may be designated in such notice.
    If  such  non-resident person shall fail to appear pursuant thereto or
  to produce the books and papers required  thereby  to  be  produced,  or
  shall  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  offer  or  sale of a franchise by such non-resident
  person constitutes a fraudulent practice 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.
    4. In any action  brought  by  the  department  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 unlawful or fraudulent practice,
  including also all property with which such property has been commingled
  if  such  property  cannot  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 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 compensations shall  be  fixed  by
  the court in any amount which it may determine to be just and equitable.
  In  any action brought by the department as provided in this article the
  court may grant such other and further relief as may be proper.
    5. Whenever the department has determined to commence an action  under
  this article, it may 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 unlawful
  or  fraudulent  practices  to  which the action which the department 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 must be filed in
  the office  of  the  clerk  of  the  county  in  which  such  order  for
  examination is filed.
    6. 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
  to the effect that the person named therein is required to appear and be
  examined at the time and place 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 delivering to and leaving  with  it  or  him  a
  certified  copy  thereof,  endorsed  as  above  provided, subject to the
  payment of witness fees and mileage as and when provided to be  paid  by
  paragraph (b) of subdivision four of section six hundred eighty-eight of
  this  article  in  connection  with  attendance  pursuant  to  subpoenas
  authorized to be issued under said section. Service of such an order may
  also be served under section six hundred eighty-six of this  article  in
  cases falling thereunder.
    7. 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 law.
    8. Any person against whom a permanent  injunction  has  been  granted
  under  the  provisions of this article may apply to the supreme court at
  any time upon at least sixty days notice to the department for an  order
  dissolving  such  injunction  or  modifying the same upon such terms and
  conditions as the court deems necessary or desirable.  Such  application
  for  dissolution  or  modification  of  such  injunction shall contain a
  recitation of the facts and circumstances which caused the  granting  of
  the  injunction;  the occupation and employment of the person making the
  application and his financial remuneration therefrom since the time  the
  injunction was granted; his net worth at the time of the application and
  the  source  thereof;  together  with  any  other facts bearing upon the
  reasonableness of the application and the character of the applicant  as
  may  enable  the  court  to issue an order that will properly dispose of
  such application in the interest of justice. A copy of such  application
  together  with  copies  of  any other papers in support thereof shall be
  served upon the department at least sixty days prior to the return  date
  thereof.  In  addition thereto the applicant shall file with the court a
  good and sufficient surety bond in  the  sum  of  one  thousand  dollars
  guaranteeing that he will pay all costs and expenses of an investigation
  by  the  department  of  such  applicant  and  the statements and claims
  alleged in the application together with any further investigation which
  the department may deem necessary or desirable to determine  whether  it
  should  consent  to the application, oppose the same, or make such other
  recommendations to the court as in  its  opinion  are  desirable  to  be
  included in any modification of such injunction. Should it appear in the
  course  of  such  investigation  by  the department that said sum is not
  sufficient,  the  department  may  apply to the court by usual notice of
  motion or order to show cause for an increase in the amount of  security
  or  further  surety  bond necessary to fully pay all of the costs of the
  investigation and the  court  may  require  such  further  bond  as  the
  situation   requires  to  fully  pay  the  costs  and  expenses  of  the
  investigation. Upon the completion of such investigation, the department
  may file an answer to such application setting forth such facts  as  are
  pertinent  to the determination by the court of the matter before it and
  whether said injunction should be dissolved, modified  or  continued  in
  whole  or  in part and what conditions, if any, shall be attached to any
  dissolution or modification of said injunction.  After  a  hearing  upon
  such application and after any further investigation, proof or testimony
  which  the  court may desire has been offered, or at any adjourned dates
  thereof, the court may make  a  final  order  dissolving  the  permanent
  injunction  or  modifying  the same upon such terms and conditions as in
  its opinion are just and desirable, or in its discretion  may  deny  the
  application. Such order shall contain a direction that the applicant pay
  to  the  department  the  costs  and  expenses  of  the investigation in
  connection with the proceeding, and any judgment entered thereon may  be
  enforced  directly against the surety on the bond. The court shall grant
  no temporary or other relief from the  injunction  in  force  pending  a
  final  determination  of  such  application.  No  application under this
  subdivision shall be entertained:
    (a) in any case where the applicant has been convicted of a felony  or
  a  crime  that  would  be a felony if committed in the state of New York
  since the issuance of the injunction, nor
    (b) in any case where the injunction was granted incident to a felony,
  or the applicant has been convicted at any time of any felony  involving
  franchises  which  are  the  subject  matter  of this article. Nor shall
  anything contained in this  subdivision  be  construed  to  deny  to  or
  interfere  with the power of the department to bring any other action or
  proceeding, civil or criminal, against the applicant at any time.
    9. The provisions of the civil practice law and rules shall  apply  to
  all  actions  brought  under  this  article  except  as herein otherwise
  provided.