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necessary steps and made the necessary effort to ensure at least
a minimum return. Morgan consulted a local geologist or expert
with respect to each potential well. Petitioners only invested
in so-called development drilling, which yielded a success rate
of 90 to 95 percent.
That effort and prudence are not evident with respect to
petitioners' investments in the Partnerships. Morgan lived a
relatively short distance from PI's headquarters and
manufacturing facility in Hyannis at the time, but neither he nor
Grelsamer ever physically inspected or even saw a Sentinel EPE
recycler. Petitioners did not personally investigate the value
placed on the recycler or hire a plastics or recycling expert to
assess the machine. Morgan was unaware of any companies that
would be suitable end-users for the recyclers and neither
petitioner ever visited any end-user locations. Grelsamer claims
that he thought that the Sentinel EPE recyclers were unique based
upon the reports by Ulanoff and Burstein, who he allegedly
believed were qualified, disinterested evaluators. However,
Ulanoff and Burstein each own interests in partnerships that
lease Sentinel recyclers, and the offering memoranda disclosed
that Burstein was a client and business associate of the
corporate counsel to PI, Miller. In light of their inadequate
investigation of the Partnership transactions, especially when
compared to the care and effort they put into their oil drilling
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