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I'm so sorry about your chapter. It truly is like a death in the family.
I've never heard of a chapter closing and all members being expelled, but I'm sure it's happened before. The circumstances must have been truly egregious - I admit, I'm very curious.
But if the national president told you personally that legal action would be taken if you identified yourself in any way with the sorority, then I would say it's pretty certain the sorority would not be shy about prosecuting. It's conceivable that the sorority could demand all goods with their copyrighted symbols, letters and emblems.
Wear your stuff in private, if you must, but start collecting some new garments.
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