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material in the SAB Recycling offering memorandum describing the
structure of the transaction. He testified that he was unaware
that F & G Corp.'s evaluators had any conflicts of interest, that
Becker was the de facto general partner of SAB Recycling, or that
Becker would be receiving a fee as such. Yet the offering
memorandum disclosed Becker's ownership of SAB Management, the
fees accruing to the general partner, and also explained that
Miller was the attorney for and a business associate of Burstein.
Fredericks' discussion with Porter, who may have had some insight
into plastics and/or plastics recycling, did not address the
Sentinel EPE recycler or the Plastics Recycling transactions. In
light of petitioners' lack of knowledge about and perfunctory
investigations of the Partnership transactions, we find their
claim that they reasonably expected an economic profit from the
Partnerships unconvincing, even taking into consideration the so-
called oil crisis.
Moreover, petitioners did not explain how the so-called oil
crisis provided a reasonable basis for them to invest in the
Partnerships and claim the associated tax deductions and credits.
The offering materials warned that there could be no assurances
that prices for new resin pellets would remain at their then
current level. One of respondent's experts, Steven Grossman,
explained that the price of plastics materials is not directly
proportional to the price of oil. In his report, he stated that
less than 10 percent of crude oil is utilized for making plastics
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