- 13 -
benefits and indicated that they were supportable, provided "that
from a business point of view this was a good economic
investment". Friedman decided to invest in Clearwater after
reading the offering memorandum and discussing the investment
with his colleagues at Shea & Gould. He also provided a copy of
the offering memorandum to his accountant. The accountant had no
experience in plastics or plastics recycling, and did not
independently investigate the plastics industry or the Sentinel
EPE recycler.
Friedman does not have any education or experience in
engineering, plastics materials, or plastics recycling. He
understood that Carroll had a background in engineering and that
another partner, Joseph Ferraro (Ferraro), may have had some
experience in his past with plastics. Friedman did not see a
Sentinel EPE recycler, investigate the uniqueness of the machine,
investigate whether the value placed on the recycler was bona
fide, or investigate whether there were any other machines that
were designed to recycle low density polyethylene. He did not do
any type of cash flow analysis or check any of the figures in the
offering memorandum. Friedman did not personally investigate PI.
He did not ask whether the technology for the Sentinel EPE
recycler was patented or inquire whether there were any suitable
end-users for the recyclers. He did not review any periodicals
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