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Kravitz also discussed the Northeast transaction and the
Sentinel EPE recycler with Grant. Grant was the president and
100-percent owner of the stock of ECI. Kravitz knew that Grant
was an attorney who had worked in the securities industry, but he
had no reason to believe that Grant had any knowledge or
experience with respect to plastics, plastics recycling, or
machinery. Grant told Kravitz that he had spoken with people at
PI and that these people at PI had told him that the Sentinel EPE
recyclers were priced as if being sold to an independent third
party. Kravitz did not know how the Sentinel EPE recycler worked
or why it was presented as unique. He did not investigate the
Sentinel EPE recycler. Kravitz understood from the offering
memorandum that the Sentinel EPE recycler was not patented, and
he did not conduct a patent search. He never saw a Sentinel EPE
recycler or asked if he could see one. Kravitz never
investigated or visited any end-user company.
Triemstra learned of the Northeast transaction from Kravitz.
Triemstra read the Northeast offering memorandum over the course
of several evenings. Triemstra previously had seen other
offering memoranda. During 1981 Triemstra also invested in a gas
exploration venture and directed the investment of $5,000 of his
retirement plan into a mobile home park. Triemstra discussed the
Northeast transaction with Kravitz, Cohn, and Hechtman. Kravitz
informed Triemstra of his discussions with Roberts and Grant.
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