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relied upon their colleagues at Shea & Gould as qualified
advisers on this matter.
1. The Private Offering Memoranda
Friedman and Alter each testified that they read the
respective offering memoranda. Their testimony and actions,
however, indicate that they did not give due consideration to all
of the information set out in the offering memoranda, and that
they ultimately did not place a great deal of reliance, if any,
on the representations therein.
The offering memoranda raised numerous caveats and warnings
with respect to the Partnerships, including: (1) The
Partnerships had no operating history; (2) management of the
Partnerships' business was dependent upon the general partner,
who had no experience in marketing recycling equipment and who
was required to devote only such time to the Partnerships as he
deemed necessary; (3) the limited partners had no right to take
part in, or interfere in any manner with, the management or
conduct of the business of the Partnerships; (4) there was no
established market for the Sentinel recyclers; and (5) although
competitors purportedly were not marketing comparable equipment,
and the Sentinel recyclers purportedly involved "carefully
guarded trade secrets," PI did "not intend to apply for a patent
for protection against appropriation and use by others."
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