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Petitioner informed Geldbach that he was seeking the type of
investments that would provide initial tax benefits and future
income. Geldbach recommended that petitioner invest in a variety
of limited partnerships, including Medical Science Associates
(MSA).3 MSA was engaged in the production, marketing, and
distribution of medical educational video tapes (the tapes) for
continuing medical education of primary care physicians. The
tapes were produced by Hahnemann Medical College and Hospital of
Philadelphia (Hahnemann) in a series of approximately 20 programs
centered around one medical subject area. At issue in this case
is the "Therapeutics through Exercise; Sports Medicine and
Chronic Pain Management in Clinical Practice" series.
Petitioner was familiar with continuing legal education for
attorneys and was aware that similar requirements for physicians
were being proposed. Prior to investing in MSA, petitioner
consulted with Geldbach with respect to its tax benefits and
income potential, and thoroughly reviewed MSA's private placement
memorandum (the offering materials or memorandum). Petitioner
testified that he also consulted with his accountant David
Andrews (Andrews) who informed him that he was not qualified to
3 The remaining partnerships included: (1) Balanced Oil and
Gas Drill/Production Fund; (2) Krypton Associates; (3) Genetic
Bank, Inc.; (4) Seigler Partners Ltd.; and (5) Finalco Equipment
Investors XI. Each reported significant ordinary losses and tax
write-offs.
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