PER CURIAM — The Grievance Committee for the Tenth Judicial District served the respondent with a verified petition dated March 20, 2018, containing four charges of professional misconduct. After a prehearing conference on July 25, 2018, and a hearing on August 28, 2018, and September 12, 2018, the Special Referee issued a report, which failed to sustain all four charges. The Grievance Committee now moves to disaffirm the Special Referee’s report, and impose such discipline upon the respondent as the Court deems just and proper. The respondent cross-moves to confirm the report of the Special Referee, dismiss the matter in its entirety, and in the event that the Court declines to grant the cross motion, to impose a sanction no more severe than a public censure. In view of the respondent’s admissions and the evidence adduced at the hearing, we find that the Special Referee properly failed to sustain charge three, but improperly failed to sustain charges one, two, and four, and those charges are sustained. Charge one alleges that the respondent commingled funds entrusted to him as a fiduciary with his own funds, in violation of rule 1.15(a) of the Rules of Professional Conduct (22 NYCRR 1200.0), formerly DR 9-102(a) of the Code of Professional Responsibility (22 NYCRR 1200.46[a]), as follows: In or about March 2008, the respondent provided legal assistance to Theresa A. Schneider in connection with her negotiation of a lease with Coruscant LLC for office space for a start-up school. In or about the end of March 2008, the respondent assisted Schneider with the actual execution of the lease, which took place in the respondent’s office in Hampton Bays. Thereafter, Schneider requested the respondent’s assistance in obtaining a loan from Schneider’s father, John Gannon, to help finance the start-up school. By letter dated May 22, 2008, from the respondent to Gannon, the respondent, on behalf of Schneider, requested a loan of $40,000 from Gannon for the business venture. In the letter the respondent assured Gannon that the respondent would “use my attorney escrow account for the purpose of distributing and monitoring this money. I am the only person with access to this account, and I will have full control over the funds.” The letter provided Gannon with the name of the bank where the respondent’s escrow account was located, Capital One Bank, with the account number ending in 0965, and the routing number ending in 912. The respondent received a check issued by Gannon, dated May 30, 2008, payable to “Theresa Schneider,” in the amount of $25,000. The memo portion of the check listed the respondent’s escrow account number and the notation “Loan pay in full by 6-10-2013.” Schneider endorsed the check, and the respondent deposited it into his operating account titled “Kevin Gilvary Attorney At Law,” account number ending in 3613, maintained at Capital One Bank on June 2, 2008. Charge two alleges that the respondent failed to maintain funds belonging to another person incident to his practice of law in a special account or accounts, separate from any of his business or personal accounts, in violation of rule 1.15(b)(1) of the Rules of Professional Conduct (22 NYCRR 1200.0), formerly DR 9-102(b)(1) of the Code of Professional Responsibility (22 NYCRR 1200.46[b][1]), based on the factual specifications alleged in charge one. Charge four alleges that the respondent breached his fiduciary duty by misappropriating funds entrusted to him incident to the practice of law, in violation of rule 1.15(a) of the Rules of Professional Conduct (22 NYCRR 1200.0), formerly DR 9-102(a) of the Code of Professional Responsibility (22 NYCRR 1200.46[a]), as follows: On May 30, 2008, the respondent’s operating account had a balance of $362.86. On June 2, 2008, the respondent deposited Gannon’s check in the amount of $25,000 into his operating account, bringing the balance to $25,362.86. The respondent, as a fiduciary, was required to maintain at least the sum of $25,000 in the operating account on behalf of Schneider, unless and until directed to disburse sums on her behalf. On June 2, 2008, check No. 1074, issued by the respondent, dated May 30, 2008, payable to the “Town of Southampton,” in the amount of $2,888.48, cleared the operating account, bringing the balance to $22,474.38. Check No. 1074 was not related to the transaction involving Schneider. Thus, the balance in the operating account fell below the amount the respondent was required to maintain and preserve on behalf of Schneider. On May 30, 2008, the respondent issued check No. 1077, payable to “Coruscant LLC,” in the amount of $4,700, as directed by Schneider. Check No. 1077 cleared the operating account on June 3, 2008. After check No. 1077 cleared the account, the respondent was required to maintain at least the sum of $20,300 on behalf of Schneider. The balance in the operating account after check No. 1077 cleared was $17,739, which was below the amount the respondent was required to maintain on behalf of Schneider. Between June 3, 2008, and June 24, 2008, 12 checks, totaling $12,337.14, issued by the respondent, cleared against the operating account. All 12 checks were issued for the respondent’s own personal or business purposes. The 12 checks were not related to Schneider’s transaction, nor were they issued at Schneider’s direction or with her knowledge. The balance in the operating account on June 24, 2008, was $5,262.24, which was below the amount the respondent was required to maintain on behalf of Schneider. Based on the respondent’s admissions and the evidence adduced, we find that the Special Referee properly did not sustain charge three, but erred in failing to sustain charges one, two, and four. The respondent’s principal defense to the charges rested on the contention that he bore no fiduciary obligation to Schneider because the assistance he provided her was as a friend, not as her attorney. He argued that, as a consequence, he was not subject to the rules prohibiting commingling and misappropriation because he did not come into possession of Schneider’s funds “incident to the practice of law.” While the evidence showed that the respondent’s prime motive in assisting Schneider was as a friend, the evidence also showed that the respondent negotiated a lease on Schneider’s behalf, identified her as a “client” on a statement of charges, and used letterhead identifying himself as “Kevin J. Gilvary, Esq.” when he wrote to Gannon asking for a loan on Schneider’s behalf. We find that the evidence was sufficient to establish that Schneider was a client, albeit not the typical paying client. In any event, at the hearing, the respondent admitted that, in retrospect, he was a fiduciary with respect to Schneider’s funds, although he did not think so at the time. He admitted that if he could do it over he would deposit the funds into a separate account. He admitted that the funds belonged to Schneider and that he did not have permission to use them at the time, yet he did use them. We reject the respondent’s contention that he was not subject to the prohibition against commingling and misappropriation, not only because Schneider was a client, but because “an attorney who is in the possession of funds belonging to another, incident to his [or her] practice of law, is a fiduciary” (Matter of Schneider, 131 AD3d 175, 182, citing Matter of Vagionis, 217 AD2d 175). Further, and more importantly:
