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petitioners, they have not shown that it was given without due
regard to his own personal stake in Irving & Co. As the
promoter, Schneider had a motive to say what was necessary in
order to get petitioners to invest in Irving & Co. Because
Schneider was not a disinterested source, petitioners should have
investigated or sought independent professional advice regarding
the validity or viability of the investment. They did not do so.
In support of their position, petitioner stated that he was
only a limited partner in Irving & Co. and that he did not have
any material knowledge of the business. He never saw a
prospectus, any books or records, or met any of the principals in
Irving & Co., other than Schneider. He testified that he simply
gave Schneider $3,000 with the hope of making a profit. He
considered himself an engineer with no experience in business
investments. When petitioner was questioned regarding how he was
going to make money, his response was that he would receive a
share of the profits from the business. He did not know how the
business would generate any profits.
We believe that a reasonable investor would have done more
to protect his investment than what petitioner did in the instant
case. Although petitioner claimed that he lacked knowledge
regarding business investments, a reasonable person, especially
one as educated as petitioner, would be prudent enough to at
least question the genuineness of the business before investing
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