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Petitioner is an attorney licensed to practice law in the
State of California. He maintains an office in San Mateo,
California, under the name Law Offices of Wayne A. McFadden.
Petitioner’s practice includes real estate law, family law, and
civil litigation. Petitioner has two daughters, Stephanie and
Kari McFadden, and three sons, Johnathan, Rob, and Christian
McFadden.
On January 1, 1986, petitioner established a profit-sharing
plan entitled The Law Offices of Wayne A. McFadden Profit Sharing
Plan (the profit-sharing plan or the plan). Petitioner was the
fiduciary and sole beneficiary of the plan. The record does not
indicate the times and amounts of petitioner’s contributions to
the plan.
In 1988, petitioner caused the plan to make separate loans
to Stephanie and Johnathan (the 1988 loans) to enable each of
them to make a downpayment on a townhouse in Hercules,
California. Each loan was for $30,000 with an interest rate of
12-1/2 percent. Petitioner viewed the loans as business
transactions and required Stephanie and Johnathan each to execute
a note secured by a first deed of trust on the townhouse that she
or he purchased. Stephanie and Johnathan made regular payments
on their loans.
In 1989, Stephanie asked petitioner for another loan. At
the time, she was dating David Payne (David), a plumber who lived
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