- 8 -
in Provizer. The fair market value of a Sentinel EPE recycler in
1981 was not in excess of $50,000.
PI allegedly sublicensed the recyclers to entities that
would use them to recycle plastic scrap. The sublicense
agreements provided that the end-users would transfer to PI 100
percent of the recycled scrap in exchange for a payment from FMEC
Corp. based on the quality and amount of recycled scrap.
Petitioners Pace and Berry each learned of the Hyannis
transaction from Lawrence Greenstein (Greenstein). Greenstein is
a certified public accountant (C.P.A.). Greenstein had been
certified just 2 years earlier, in 1979, the same year he joined
and became a partner at his father's firm, Greenstein & Co., PC.
Greenstein's client services included accounting, tax
preparation, and investment analysis. The latter entailed
checking figures and determining whether an investment was suited
to a client's economic outlook and station in life. When
reviewing an investment involving high technology or other field
outside his expertise, Greenstein relied upon the representations
and due diligence of the dealer or promoter of the investment.
Greenstein learned about Hyannis from a client. The client
had heard about Hyannis from a member of the New York Stock
Exchange, Cowen & Co., Inc. (CCI). Greenstein spoke about
Hyannis with representatives of CCI, in particular Peter Zuck
(Zuck). It was Greenstein's understanding that Zuck was in
charge of marketing the Hyannis investment at CCI. After
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