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plastics materials or plastics recycling. Greenstein relied upon
CCI and the offering materials for the value of the Sentinel EPE
recyclers. Greenstein testified that he assumed that CCI had
"done all of the due diligence that was necessary", and that the
representations in the offering materials were therefore
reliable. Nevertheless, petitioners claim that they relied on
Greenstein regarding the value of the recyclers and the economic
viability of the Plastics Recycling transactions. In these
cases, recyclers purportedly worth $1,066,666 each were being
sold, resold, leased, and subleased. Petitioners were not
reasonable in relying upon Greenstein in claiming the deductions
and credits related to their investments in Hyannis. In 1981 he
was a relatively inexperienced C.P.A. who had no knowledge of the
industry in which petitioners were considering investing. On
behalf of his clients, Greenstein accepted the selling broker's
offer of a plane trip to Hyannis, took the guided tour of the PI
plant to ascertain that there really were recycling machines, and
returned to tell his clients that if everything were exactly as
represented in the seller's offering circular, there were good
tax benefits up front so the deal was attractive. He did not
obtain full disclosure of the Hyannis transaction, or raise any
question concerning any aspect of the offering circular.
Moreover, on its face, the Hyannis transaction should have
raised serious questions in the minds of ordinarily prudent
investors. According to the offering memorandum, the projected
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