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with respect to a partnership called Madison Recycling Associates
(Madison Recycling). According to the private offering memoran-
dum, Madison Recycling was a New York limited partnership formed
on October 1, 1982, that was to lease, as lessee, steam chest
molded expanded polystyrene recycling equipment called Sentinel
EPS Recyclers (EPS Recyclers). The private offering memorandum
further indicated that Madison Recycling and two other entities
were to engage in a joint venture in which the EPS Recyclers were
to be used in a process designed to recycle scrap polystyrene.
According to the private offering memorandum, the recycled
polystyrene was to be sold on the open market, and Madison
Recycling was to receive a share of the profits from such sales.
Mr. Korchak considered in some detail whether to invest in
Madison Recycling. That was because he knew a lot about the
business of recycling technologies. In considering whether to
invest in Madison Recycling, Mr. Korchak was also aware that
Congress was encouraging investment in recycling in order to
conserve energy.
After considering in detail whether to invest in Madison
Recycling, on November 30, 1982, without consulting petitioner,
Mr. Korchak purchased an interest in Madison Recycling for
$75,000 (Mr. Korchak’s Madison Recycling investment). Mr.
Korchak did not use the joint checking account into which peti-
tioner’s NYU salary was deposited in order to purchase Mr.
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