Stuart A. and Harriet J. Gollin, et al. - Page 54

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          Porter was whether he believed a polyethylene or polystyrene                
          recycler was economically viable.  They did not discuss the                 
          Sentinel EPE recycler, the Plastics Recycling transactions, or              
          plastics recycling in general.  Fredericks will not be relieved             
          of the negligence additions to tax based upon his purported                 
          reliance on Steele, Cohen, and Porter.                                      
               3.  The Private Offering Memoranda                                     
               Petitioners in very general terms maintain that they                   
          reasonably relied upon the offering memoranda and the tax opinion           
          letters appended thereto.  However, petitioners' testimony and              
          actions indicate that they did not give due consideration to all            
          of the information set out in the offering memoranda and that               
          they ultimately did not place a great deal of reliance, if any,             
          on the representations therein.                                             
               The offering memoranda raised numerous caveats and warnings            
          with respect to the Partnerships, including:  (1) The substantial           
          likelihood of audit by the IRS and a likely challenge of the                
          purported value of the recyclers; (2) the general partner's lack            
          of experience in marketing recycling or similar equipment; (3)              
          the lack of an established market for the recyclers; and (4)                
          uncertainties regarding the market prices for virgin resin and              
          the possibility that recycled pellets would not be as marketable            
          as virgin pellets.  In addition, the offering memoranda noted a             
          number of conflicts of interest, including Miller's interest in F           






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