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Specifically, the offering memoranda state: (1) That there is a
substantial likelihood of audit by the Internal Revenue Service
(IRS) and that the purchase price paid by F & G Corp. to ECI
Corp. probably would be challenged as being in excess of fair
market value; (2) that the Partnerships have no prior operating
history; (3) that the general partners have no prior experience
in marketing recycling or similar equipment; (4) that the limited
partners have no control over the conduct of the Partnerships'
business; (5) that there is no established market for the
Sentinel EPE recyclers; (6) that there are no assurances that
market prices for virgin resin will remain at their current costs
per pound or that the recycled pellets will be as marketable as
virgin pellets; and (7) that certain potential conflicts of
interest exist.
Petitioners in the cases under consideration do not have any
education or work experience in plastics recycling or plastic
materials. They did not independently investigate the Sentinel
EPE recyclers or see a Sentinel EPE recycler or any other type of
plastics recycler prior to participating in the recycling
ventures.
Petitioners each learned of their respective Partnership
transaction from members of the accounting firm Bachmann,
Schwartz, and Abramson (Bachmann, Schwartz). Bachmann, Schwartz
was formed in 1972 by Donald Bachmann (Bachmann) (deceased prior
to trial), a certified public accountant (C.P.A.), William
Abramson (Abramson), also a C.P.A., Richard Schwartz and Ivan
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