Background
Anthony S. Chilliest, a New York attorney admitted in 1995 and maintaining a First Department office, was charged by the Attorney Grievance Committee (AGC) with misconduct arising from his representation of an estate in the sale of a residential apartment. According to the charges — ultimately sustained after a full evidentiary hearing before a Court-appointed Referee — Chilliest committed non-venal misappropriation of client and third-party funds by depositing a portion of the buyer’s down payment into his firm’s business accounts and by remitting all sale proceeds he held to just one of the estate’s three heirs before the Surrogate Court proceedings were complete. He also commingled the estate funds with firm business funds, failed to segregate them as required by RPC Rule 1.15(a) and (b), and failed to maintain the required bookkeeping records under Rule 1.15(d).
Chilliest initially failed to answer the charges, prompting the AGC to move for a default finding. The First Department instead directed him to file an answer within 30 days. He answered and denied all charges. The Referee held hearings in May, June, and June 2025, sustained seven of eight charges, and after a separate sanction hearing in December 2025 recommended a four-year suspension. The AGC additionally sought confirmation that charge 8 — that Chilliest’s underlying misconduct also violated RPC Rule 8.4(h) (conduct adversely reflecting on fitness as a lawyer) — should be sustained, disagreeing with the Referee’s limited reading of that rule. The court had separately placed Chilliest on interim suspension in March 2026 for failure to cooperate with the AGC.
The Court’s Holding
The First Department confirmed the Referee’s findings on all seven sustained charges and agreed with the AGC that charge 8 should also be sustained. On the Rule 8.4(h) question, the court held that the rule applies to violations “both within and outside of rule 8.4” — the Referee erred in reading 8.4(h) as a catch-all applicable only where the conduct does not violate another provision. The court cited prior First Department decisions in Matter of Edelman (2025), Matter of Novofastovsky (2022), and Matter of Marshall (2017) for the principle that commingling, non-venal misappropriation, and bookkeeping failures can simultaneously violate Rule 1.15 and Rule 8.4(h).
The court confirmed the four-year suspension as falling within the two-to-four year range typically imposed for comparable misconduct — citing Matter of Castro (four-year suspension for non-venal misappropriation and failure to cooperate) and Matter of Racer (four-year suspension for three years of persistent bookkeeping non-compliance). Aggravating factors included Chilliest’s interim suspension for non-cooperation and a history of three prior Admonitions — two of which involved the same core conduct (non-venal misappropriation, commingling, and bookkeeping failures) now charged in this matter.
Key Takeaways
- RPC Rule 8.4(h) — prohibiting conduct that adversely reflects on a lawyer’s fitness — applies cumulatively alongside other rule violations, not only as a standalone catch-all for misconduct not otherwise covered by rule 8.4; practitioners defending disciplinary charges should expect Rule 8.4(h) to be added whenever core escrow or fitness violations are charged.
- Non-venal misappropriation (i.e., converting client funds without intent to permanently deprive) combined with bookkeeping failures and a history of similar prior discipline falls in the four-year suspension range in the First Department — it is not a mitigation-rich path to a lesser sanction.
- Estate representations require strict segregation of sale proceeds among all beneficiaries until Surrogate Court proceedings are complete; remitting funds to one heir prematurely is misappropriation even if the attorney believed that heir was entitled to the money.
Why It Matters
This decision reinforces the First Department’s consistent and strict treatment of escrow and client-fund violations, particularly for attorneys handling estate real estate transactions. New York’s RPC Rule 1.15 requires that client funds be kept in separate IOLA accounts, not commingled with firm operating funds, and that complete bookkeeping records be maintained at all times. Violations of these rules — even without proof of intent to steal — remain among the most common and most serious grounds for attorney suspension in the First Department.
For practitioners who handle closings, estate sales, or any matter where they serve as escrow agents, the message is clear: the IOLA account must be treated as inviolable, disbursements must await final authorization from all parties and relevant courts, and bookkeeping records must be contemporaneously maintained. Prior Admonitions for the same type of conduct significantly elevate the exposure from a censure to a multi-year suspension. The court’s clarification that Rule 8.4(h) stacks with Rule 1.15 violations means the AGC now has an additional charge available in virtually every escrow-misconduct case.