The California State Bar Court Review Department affirmed a trial judge’s finding that an attorney violated the business transaction rule but rejected the finding of misappropriation because the trust account rules were inapplicable.

As a result, the review department recommends a two-year suspension rather than disbarment.

Because the funds were not subject to these requirements, we disagree with the hearing judge’s rule 4-100(B)(3) culpability finding. We also disagree with the judge’s misappropriation finding because it is based on a different theory than was charged in the Notice of Disciplinary Charges (NDC). Bradley did not have notice or an opportunity to defend against the uncharged theory.

We conclude disbarment is unwarranted, absent culpability for misappropriation. We recommend instead that Bradley be actually suspended for two years and until he proves his rehabilitation and fitness to practice law at a formal reinstatement hearing.

On the merits

The hearing judge correctly determined that the Tiburon Project terms were not fair and reasonable, nor were they fully disclosed to Lomas. The Investment Agreement, barely over a page long, is so vague that it fails to include basic provisions of the deal. The Agreement does not contain terms specifying the consequences if Epis failed to pay off the note nor does it set forth any clear provision for the return or distribution of capital.

Bradley failed to disclose material facts about the project’s risk versus its potential. He did not reveal the extent to which Epis was unable or unwilling to invest additional money, a condition demonstrably crucial to the project’s success. Bradley also did not tell Lomas about his own financial weakness, which was highly relevant, as Bradley’s personal agreement was all that guaranteed the investment.