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during the years at issue and they often discussed investment
opportunities with each other. Each reviewed the offering
materials for the Partnership transactions, and Omohundro,
Frabotta, and Tomasetti together visited the PI plant in Hyannis,
Massachusetts. At the PI plant, they saw a Sentinel EPE recycler
in operation and discussed the nature of the business with the
promoters of the partnerships and PI personnel.
During Tomasetti's tour at PI, there was an inquiry about
the cost of the Sentinel EPE recycler but PI representatives
declined to discuss that subject because, as Tomasetti understood
it, the machine was proprietary in nature and had not been
patented. (Although PI claimed that its information was a trade
secret and that it never obtained patents on its machines, in
fact, PI had obtained numerous patents prior to the Partnership
transactions and had also applied for a trademark for the
Sentinel EPE recyclers). PI indicated that there was no other
comparable machine on the market and Tomasetti made no
independent inquiries or investigation regarding the uniqueness
or value of the recycler. Tomasetti read the reports of Ulanoff
and Burstein, but did not fully understand them and did not
attach much weight to them. No other members of Tomasetti's
accounting firm performed any due diligence or investigation of
It is not clear whether Finkle & Co. prepared the report for
Northeast or Roberts' consulting firm.
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