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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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