Robert D. and Patricia K. Kaliban, et al. - Page 14

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                  Feinstein relied on the offering memorandum for the value of                        
            the Sentinel EPE recycler.  He understood that the purported                              
            value of the Sentinel EPE recycler was based upon a projected                             
            stream of future income.  Feinstein did not verify the                                    
            manufacturing cost of a Sentinel EPE recycler beyond speaking                             
            with a friend and associate6 "about pricing and how things are                            
            priced in that industry."  He understood from his friend that the                         
            stream-of-income method of valuation was not an unusual means of                          
            pricing equipment.  Feinstein reviewed the stream of income                               
            projections in the offering memorandum, but did not verify any of                         
            the assumptions upon which they were based.  He did not research                          
            or investigate the market for plastics recyclers or recycled                              
            resin pellets.                                                                            
                  Feinstein spoke to a friend, Jerry Lauren (Lauren), who was                         
            a manufacturer's representative in the plastics packaging                                 
            industry.  He understood from Lauren that PI was a privately                              
            owned company that made specialized machinery for companies                               
            involved in the packaging industry.  Feinstein did not formally                           
            hire or pay Lauren.  He did not provide Lauren with a copy of the                         
            Poly Reclamation offering memorandum.  Lauren did not prepare a                           
            written report for Feinstein.  Feinstein "never asked * * *                               
            [Lauren] anything about the partnership".  He only asked Lauren                           
            what he knew about PI.  Feinstein did not ask Lauren, or anyone                           

            6     Feinstein did not state who this friend and associate was or                        
            what his or her credentials were.                                                         




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