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stream of future income. Feinstein did not verify the
manufacturing cost of a Sentinel EPE recycler beyond speaking
with a friend and associate,7 "about pricing and how things are
priced in that industry." He understood from his friend that the
stream-of-income method of valuation was not an unusual means of
pricing equipment. Feinstein reviewed the stream of income
projections in the offering memorandum, but did not verify any of
the assumptions upon which they were based. He did not research
or investigate the market for plastics recyclers or recycled
resin pellets.
Feinstein spoke to a friend, Jerry Lauren (Lauren), who was
a manufacturer's representative in the plastics packaging
industry. He understood from Lauren that PI was a privately
owned company that made specialized machinery for companies
involved in the packaging industry. Feinstein did not formally
hire or pay Lauren. He did not provide Lauren with a copy of the
Poly Reclamation offering memorandum. Lauren did not prepare a
written report for Feinstein. Feinstein "never asked * * *
[Lauren] anything about the partnership". He only asked Lauren
what he knew about PI. Feinstein did not ask Lauren, or anyone
7 Feinstein did not state who this friend and associate was or
what his or her credentials were.
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