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Spears did not know the number of SAB recycling partnerships
in which Becker was the general partner. Although Spears knew
that Becker was not an expert in plastics recycling, he never
asked Becker if he had sought advice from an expert independent
of the Partnership and insiders to the Partnership transactions.
Spears claims that he believed the price of the recyclers had
been negotiated at arm's length and that he was unaware of
whether there was an established market for the recycling
equipment. In fact, as Spears stipulated, no negotiations for
the price of the Sentinel EPE recyclers took place between or
among PI, ECI, and F & G, and the offering memoranda clearly
disclosed that there was no established market for leasing or
operating the Sentinel EPE recyclers.
Becker introduced the Plastics Recycling transactions to
Farrell in mid to late 1980. The tax benefits interested
Farrell. He understood that the tax credits would exceed his
investment and thereby eliminate any out-of-pocket investment
expense. He knew Becker was not a plastics recycling expert, but
believed Becker was capable of judging the tax aspects of the
transactions, if not the technical aspects of them. Farrell
never asked Becker if he consulted any experts. Farrell did not
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