- 14 -
did not read the entire opinion letter included in the offering
memorandum. At trial petitioner could not recall the name of the
equipment involved, the value of the equipment, or that the
offering memorandum disclosed Miller's relationship with PI.
Petitioner was invited to see the Sentinel EPE recycler but
declined because he "wasn't disposed to do that." Petitioner
testified that he had some conversations with Roberts after
reviewing the offering memorandum, but he could not recall the
particulars of those conversations. Petitioner could only
surmise that because he proceeded with the investment, he must
have received "answers that apparently satisfied" him.
We find petitioner's purported reliance on Miller and
Roberts was not reasonable, not in good faith, nor based upon
full disclosure. The record does not show that either Miller or
Roberts possessed any special qualifications or professional
skills in the recycling or plastics industries. Miller was
corporate counsel to PI and Roberts was general partner and a
promoter of Hyannis. See Vojticek v. Commissioner, T.C. Memo.
1995-444, to the effect that advice from such persons "is better
classified as sales promotion". Moreover, petitioner's testimony
indicates that he relied more on his personal judgment or
instincts in making the investment than any conversations he may
have had with Miller and Roberts. A self-described risk taker
and marketing person, petitioner testified that when he first
heard of the plastics recycling transaction, "it struck a chord
for whatever reason" and sounded like a viable idea. Petitioner
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011