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included research of oil recovery methods and who hired an
independent geologic engineer to review the offering materials.
Id. at 166. In the present cases, petitioners had no education
or work experience with respect to plastics or plastics
recycling. Petitioners did not independently investigate the
Sentinel EPE recyclers, nor did they hire an expert in plastics
to evaluate the Partnership transactions.
In Rousseau v. United States, supra, the property underlying
the investment, ethanol producing equipment, was widely
considered at that time to be a viable fuel alternative to oil,
and its potential for profit was apparent. In addition, the
taxpayer therein conducted an independent investigation of the
investment and researched the market for the sale of ethanol in
the United States. In contrast, as we noted in distinguishing
the Krause case, there is no showing in these records that the
so-called oil crisis would provide a reasonable basis for
petitioners' investing in the polyethylene recyclers here in
question. Petitioners did not independently investigate the
Sentinel EPE recyclers or hire an expert in plastics to evaluate
the Partnership transactions. The facts of petitioners' cases
are distinctly different from the Rousseau case. We hold that
petitioners' vague, general claims concerning the so-called oil
crisis are without merit, and that the Krause and Rousseau cases
are inapplicable.
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