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Recycling offering memorandum from a legal standpoint. He did
not consider Cohen to be an engineer or an expert in plastics
recycling. Cohen indicated that he had invested in a 1981
Plastics Recycling transaction, and he agreed to compare the two
offering memoranda. Fredericks understood from Cohen that the
two transactions were virtually the same and that the investment
offered good tax advantages. He did not ask Cohen whether he had
received any royalties.
Porter was a licensed engineer and the president and
principal stockholder of PDE, a plastics molding company for
which Fredericks was a director. Fredericks knew that PDE had
been recycling plastic scrap since the late 1970's. After
reviewing the SAB Recycling offering memorandum, Fredericks
telephoned Porter and asked him if there was any economic value
in a machine that recycles polyethylene or one that recycles
polystyrene. According to Fredericks, Porter believed that
recycling was economically viable depending upon the price of
oil. Fredericks did not inform or question Porter about the
Plastics Recycling transactions, the Sentinel EPE recycler, or
any details of plastics recycling. He did not tell Porter what
machine he was investing in; he did not describe the machine to
Porter; he did not tell Porter the price of the machine; he did
not send Porter a copy of the offering memorandum; and he did not
ask Porter if there were any comparable machines already on the
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