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verification, however, his request was denied. Becker was
informed that such information was proprietary and secret, and
that he would just have to take PI's representations as true.
Although PI claimed that all of its information was a trade
secret, and that it never obtained patents on any of its
machines, PI had in fact obtained numerous patents prior to the
recycling transactions and had also applied for a trademark for
the Sentinel recyclers. Becker decided to accept PI's
representations after speaking with Miller (the corporate counsel
to PI), Canno (who had never been to PI's plant or seen a
Sentinel EPE recycler), and a surrogate judge from Rhode Island
who did business in the Boston-Cape Cod area (and who had no
expertise in engineering or plastics materials). Becker
testified that he was allowed to see PI's internal accounting
controls regarding the allocation of royalty payments and PI's
recordkeeping system in general. In Provizer v. Commissioner,
supra, this Court found that "PI had no cost accounting system or
records."
Becker confirmed at trial that he relied on the offering
materials and discussions with PI personnel to establish the
value and purported uniqueness of the recyclers. Becker
testified that he relied upon the reports of Ulanoff and Burstein
contained in the offering materials, despite the fact: (1)
Ulanoff's report did not contain any hard data to support his
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