Leon M. and Mary K. Jaroff - Page 42

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          and that there was a sufficient base of end-users for the                   
          machines; yet he never saw PI's client list.  At the time of the            
          closing of the Partnerships, Becker did not know who the end-               
          users were or whether there were any end-users actually committed           
          to the transaction.                                                         
               Becker purportedly checked the price of the pellets by                 
          reading trade journals of the plastics industry.  However, he did           
          not use those same journals to investigate the recyclers'                   
          purported value or to see whether there were any advertisements             
          for comparable machines.  In concluding that the Partnerships               
          would be economically profitable, Becker made two assumptions               
          that he concedes were unsupported by any hard data:  (1) That               
          there was a market for the pellets; and (2) that market demand              
          for them would increase.                                                    
               Becker had a financial interest in SAB Recovery, SAB                   
          Reclamation, and the SAB Recycling Partnerships, generally.  He             
          received fees in excess of $500,000 with respect to the SAB                 
          Recycling Partnerships, and more than $200,000 of those fees was            
          derived from SAB Recovery and SAB Reclamation.  Becker also                 
          received fees for investment advice from some individual                    
          investors.  In addition, Becker Co. received fees from the SAB              
          Recycling Partnerships for preparing their partnership returns.             
          As Becker himself testified, potential investors could not have             
          read the offering materials and remained ignorant of the                    
          financial benefits accruing to him.                                         




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