Stuart A. and Harriet J. Gollin, et al. - Page 26

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          with Becker for lunch or coffee every 2 or 3 months.  Steele did            
          not testify at the trial in docket No. 21847-90.                            
               Fredericks acquired a 5.076923-percent interest in SAB                 
          Recycling for $50,000 in 1982, without taking into consideration            
          any sales commission rebate or advance royalty distribution.  As            
          a result of his investment in SAB Recycling, on their 1982 return           
          he and his wife Stephanie claimed an operating loss in the amount           
          of $39,741 and investment tax and business energy credits in the            
          amount of $82,638.  Respondent disallowed the Fredericks' claimed           
          operating loss and credits related to his investment in SAB                 
          Recycling.                                                                  
               Fredericks learned about the Plastics Recycling transactions           
          and SAB Recycling from Becker in 1982.  Becker had forwarded at             
          least 6 prospectuses to Fredericks in early 1982, one of which              
          was for SAB Recycling.  SAB Recycling was the only one of those             
          investments that interested Fredericks.  Fredericks reviewed the            
          SAB Recycling offering memorandum.  He did not understand most of           
          the material outlining the structure of the leasing transactions.           
          Fredericks claims he did not notice any conflicts of interest               
          problems with F & G Corp.'s evaluators or that Becker would be              
          receiving a general partner fee.  At trial he could not recall              
          reading that the projected losses and credits for the first year            
          would exceed the amount of his investment.                                  
               After reviewing the offering memorandum, Fredericks                    






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