- 46 -- 46 -
analysis of the Plastics Recycling transactions reflected this
circumstance. Gollin knew that Becker was not an engineer or
expert in plastics materials or plastics recycling, and Fishbach
and Fredericks had no reason to believe otherwise. Becker
testified that he was very careful not to mislead any of his
clients regarding the particulars of his investigation. As he
put it: "I don't recall saying to a client I did due diligence *
* * [Rather,] I told [my clients] precisely what I had done to
investigate or analyze the transaction. I didn't just say I did
due diligence, and leave it open for them to define what I might
or might not have done."
The purported value of the Sentinel EPE recycler generated
the deductions and credits in these cases, and that circumstance
was reflected in the offering memoranda. Certainly Becker
recognized the nature of the tax benefits and, given their
education and professional experience, petitioners should have
recognized it as well. Yet neither petitioners nor Becker
verified the purported value of the Sentinel EPE recycler.
Petitioners ultimately relied on Becker, and Becker confirmed at
trial that he relied on PI for the value of the Sentinel EPE
recyclers. Investors as sophisticated as petitioners either
learned or should have learned the source and shortcomings of
Becker's valuation information when he "precisely" disclosed
"what [he] had done to investigate or analyze the transaction."
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