In the Matter of Adam Kalish, an attorney and counsel-at-law
Categories
Attorneys and Parties
Brief Summary
Attorney discipline involving misuse of an attorney escrow account and mishandling of fiduciary funds.
The Special Referee sustained all three disciplinary charges arising from the respondent's escrow-account conduct.
The Appellate Division overturned the finding sustaining charge two, while confirming the findings on charges one and three.
The court found the evidence and the respondent's admissions sufficient to prove misappropriation of fiduciary funds under rule 1.15(a) of the Rules of Professional Conduct [requiring lawyers to safeguard client and fiduciary funds and prohibiting misappropriation] and conduct adversely reflecting on fitness under rule 8.4(h) [prohibiting conduct that adversely reflects on a lawyer's fitness], but concluded that charge two should not have been sustained on this record. Despite mitigation, the court viewed the respondent's conduct as a serious abdication of fiduciary duty, aggravated by his service on a grievance committee at the time of the misconduct.
Background
Adam Kalish maintained a Citibank attorney trust account. As of April 13, 2020, the account held $572,158.34 in fiduciary funds for 32 client matters. After being retained in connection with a New Jersey real-estate refinancing and transfer involving 1 Centennial Plaza, LLC and related entities, Kalish allowed funds from unknown investors or lenders to be wired into his escrow account and then wired money out based largely on instructions from Sam Sprei, a referral source, without knowing the source or recipients of the funds and without confirming that deposits had cleared. By May 1, 2020, the account balance had dropped to $148,423.57, creating a deficiency of $423,734.77. Kalish later discovered that several deposited checks had been dishonored and realized he had been disbursing other clients' money. He did not immediately report the matter to authorities, instead attempting to work with Sprei to restore the funds. He testified that all clients were eventually made whole. In mitigation, he cited the onset of the COVID-19 pandemic, his wife's high-risk pregnancy, his remorse, lack of prior discipline, and substantial community and bar-association service.
Lower Court Decision
After a hearing, the Special Referee found that Kalish's handling of the escrow account constituted professional misconduct and sustained all three charges. The Referee emphasized Kalish's extreme carelessness, including relying on a basic online banking platform, failing to review office mail for an extended period, not identifying the source or destination of funds moving through the escrow account, and failing to take immediate remedial action once he learned of the problem.
Appellate Division Reversal
The Appellate Division granted the Grievance Committee's motion only in part and granted Kalish's cross-motion only in part. It confirmed the Special Referee's report as to charges one and three, denied confirmation as to charge two, and disaffirmed the report to that extent. The court held that Kalish misappropriated fiduciary funds and engaged in conduct adversely reflecting on his fitness as a lawyer, but that charge two was not sustainable on the record before it. The court imposed a three-year suspension from the practice of law beginning May 29, 2026, with no application for reinstatement before November 29, 2028, subject to compliance with 22 NYCRR 1240.16 [rule governing reinstatement applications], 22 NYCRR 1240.15 [rules governing the conduct of disbarred or suspended attorneys], 22 NYCRR 691.11(a) [continuing legal education requirements], and Judiciary Law § 90 [statutory authority governing attorney discipline].
Legal Significance
The decision underscores that an attorney may be disciplined severely for escrow-account misappropriation even where the misconduct is claimed to be unintentional, no client complaint is filed, and affected parties are later reimbursed. The court treated the respondent's failure to verify cleared funds, his willingness to let unknown third-party money pass through his escrow account, and his delay in taking decisive remedial action as grave fiduciary breaches. It also shows that prior service on a grievance committee can be treated as an aggravating factor because it demonstrates heightened awareness of professional obligations.
Lawyers must independently verify and safeguard escrow funds at all times; trusting a referral source, assuming deposits are available, or using an escrow account as a pass-through for poorly understood transactions can lead to findings of misappropriation and substantial suspension.