N.Y. General Business Law § 352-h: Trust funds

§ 352-h. Trust funds. Whenever hereafter any person, partnership,

corporation, company, trust or association, offers or sells securities

described in subdivision one of section three hundred fifty-two-e of

this article to the public in or from the state of New York, then all

moneys received in connection therewith, including deposits or advances

therefor, shall continue to be the money of the person making such

purchase, deposit or advance, and shall be held in trust by the person,

partnership, corporation, company, trust or association offering or

selling such securities and shall not be commingled with the personal

moneys or become an asset of the person, partnership, corporation,

company, trust or association receiving the same, and shall not be

subject to attachment, levy or other encumbrance in any action by a

third party against such person, partnership, corporation, company,

trust or association; and said funds shall remain in trust until

actually employed in connection with the consummation of the

transaction; and in the event insufficient funds are raised to

effectuate the consummation of the transaction, or if the transaction

does not result in the acquisition of the real estate, mortgage or lease

involved for any reason or reasons, then all moneys so collected less

such amounts actually employed in connection with the consummation of

the transaction shall be fully returned to the investors. Any provision

of any contract or agreement or understanding, whether oral or in

writing, whereby a person who so purchases such securities waives any

provision of this section is absolutely void. Nothing herein contained

shall be deemed to preclude an action against a defaulting investor.