Guilt by Association Fallacy?

The first premise is false, that's the problem. Most New Yorkers aren't criminal. They're just New Yorkers.

Since P1 is false, it does not imply conclusion C).

No, this is not an ad hominem (guilt by association) . This is general non sequitur . It is a false statement/claim with a conclusion that does not follow. If the premise were true, the conclusion would be "Therefore most of the New Yorker's you met are likely to be criminals." Even this assumes an equally likely chance of meeting a criminal vs. non-criminal, which is unlikely to be the case.