Section 338 - Inspection power of department of state; unlawful practices; penalties1. The department of state may cause an investigation and an inspection to be made of any subdivision of vacant land proposed to be offered for sale or lease in this state pursuant to this article and may make a report of its findings thereon.2. Where an inspection is to be made of subdivided lands, situated outside of the state of New York and being offered for sale in this state, the statement required by section three hundred thirty-seven-a shall be accompanied by the filing fee and in addition there shall be remitted to the department of state an amount equivalent to the cost of travel from New York to the location of the project and return, as estimated by the department of state, and a further amount estimated to be necessary to cover the additional expenses of such inspection, not to exceed fifteen dollars a day, for each day consumed in the examination of the project.3. It shall be unlawful for the subdivider or his or its agent, to change the financial structure of such offering after the submission thereof to the department of state without first notifying the department in writing of such intention.4. Where the vacant lands to be subdivided shall be subject to a lien or encumbrance securing or evidencing the payment of money other than taxes or assessments levied by public authority, or where the interest of the owner and subdivider or his or its agent be held under option or contract of purchase or in trust, it shall be unlawful to sell any vacant land in such subdivision unless provision in such lien, encumbrance, option, contract or trust agreement, or in an agreement supplementary thereto, enables the vendor to convey valid title to each parcel so sold or leased free of such lien, encumbrance, option, contract or trust agreement, upon completion of all payments and performance of all the terms and conditions required to be made and performed by the vendee under the agreement of sale. Where the consideration price for the lot or lots sold has been amortized to an extent that the balance due and owing thereunder equals in an amount required to release such lot or lots from any existing lien, encumbrance, tax, assessment, option contract or first agreement, and the initial cost for said vacant land has not been paid for by the owner or subdivider, that in such event all moneys thereafter received by the owner or subdivider from the purchaser of said lot or lots shall be segregated and kept in a separate account and be impressed with a trust which shall be applied towards the clearance of title to the vacant land thereafter intended to be conveyed to the purchaser. After default shall have occurred in the payment of any tax or assessment levied and assessed against the premises or after default shall have occurred under and pursuant to the terms of any contract, mortgage lien, charge or encumbrance, all moneys received by the owner or subdivider from the purchaser of said lot or lots shall be segregated and kept in a separate account and be impressed with a trust which shall be applied towards the clearance of title to the vacant land thereafter intended to be conveyed to the purchaser. Certified or verified copies of documents containing such provisions shall be filed with the department of state prior to the sale or lease or offer of sale or lease of any part of the subdivision.5.(a) Every person, officer, director, agent or employee of a company, partnership, association or corporation who or which knowingly offers to sell or to lease, or sells or leases subdivided lands prior to the filing of the offering statement and the verified statement required by this article shall be guilty of a felony.(b) Except as provided in subdivision (a) hereof, every person, officer, director, agent or employee of a company, partnership, corporation, or association who or which knowingly authorizes, directs or aids in the publication, advertisement, distribution or circulation of any device, scheme or artifice for obtaining money or property by means of any false pretense, representation or promise concerning any vacant land or lands or subdivision thereof, offered for sale or lease, and every person, officer, director, agent or employee of a company, partnership, corporation or association who or which shall have made or attempts to make in the state fictitious or pretended purchases or sales of vacant lands, or who, in any other respect, wilfully violated or fails to comply with any of the provisions of this article, or knowingly omits or neglects to obey, observe or comply with any order, permit, decision, demand or requirement of the department of state under the provisions of this article, is guilty of a misdemeanor and, if a licensee under article twelve (a) of this chapter, the department of state also may revoke or suspend his license in the manner provided in such article. The commission of a single act prohibited by this article shall constitute a violation thereof. All courts of special sessions, within their respective territorial jurisdiction, are hereby empowered to hear, try, and determine such violations without indictment, and to impose the punishments prescribed by law therefor.6. It shall be the duty of the attorney-general to prosecute all violations of the provisions of this article; such prosecutions may be instituted upon the written request or demand of the department of state. In all criminal proceedings, the attorney-general may appear in person or by his deputy before any court of record or any grand jury and exercise all the powers and perform all the duties in respect of such actions or proceedings which the district attorney would otherwise be authorized or required to exercise or perform; or the attorney-general may in his discretion transmit evidence, proof and information as to such offense to the district attorney of the county or counties in which the alleged violation has occurred, and every district attorney to whom such evidence, proof and information is so transmitted shall forthwith proceed to prosecute any corporation, company, association, or officer, manager or agent thereof, or any firm or person charged with such violation. In any such proceeding, wherein the attorney-general has appeared either in person or by deputy, the district attorney shall only exercise such powers and perform such duties as are required of him by the attorney-general or the deputy attorney-general so appearing. The attorney-general shall, upon a conviction for a violation of any provision of this article, and within ten days thereafter, make and file with the department of state a detailed report showing the date of such conviction, the name of the person convicted and the exact nature of the charge.7. Any false statement contained in any statement or supplemental statement filed with the department of state pursuant to the requirements of this article, or in any affidavit attached thereto, shall constitute a violation of this article.8. Any person, partnership, corporation, company or association representing in any manner that the state, the department of state, or any officer thereof has recommended or acquiesced in the recommendation of the purchase of any subdivided lands offered for sale or lease, in advertising or offering such subdivided lands for sale or lease, shall be guilty of a misdemeanor punishable by a fine of not more than one thousand dollars, or imprisonment for not more than one year or by both such fine and imprisonment.N.Y. Real Prop. Law § 338