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Fredericks that he would be receiving commissions as general
partner,6 which also was disclosed in the SAB Recycling offering
memorandum. Fredericks discussed the impact the investment would
have on his estimated tax and matters of that nature with Steele;
the two did not discuss the economics of the investment. The
Fredericks do not have any education or experience in engineering
or plastics recycling. Becker and Steele never said that they
were expert in engineering or plastics recycling, and Fredericks
never thought they had expertise on these subjects. Fredericks
did not ask Becker on whom he relied in conducting his
investigation or whether he consulted any independent experts
unrelated to SAB Recycling, the promoters, or F & G Corp. He did
not ask Becker if he had any conflict of interest. Fredericks
did not ask Becker how many machines would be placed by PI or if
there were any similar recyclers already on the market. The
Fredericks did not see a Sentinel EPE or EPS Recycler prior to
their investment in SAB Recycling. They did not know whether the
machines were unique at the time of their investment. The
Fredericks never made a profit in any year from their
participation in SAB Recycling.
6 At trial, Becker was asked, "Did you advise Mr. Fredericks
that you would be receiving commissions as a general partner for
this investment?" Becker answered, "Yes, I did." However,
Becker did refund 7.5 percent of Fredericks' investment, which
represented the offeree representative fee.
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