- 22 - should go into this deal at all based on the valuations established." He did not market the Partnerships; in his view the deal "was very aggressive" and "sure to be challenged" by the IRS. He knew that the recyclers were insured for only a "nominal amount" in relation to their purported value. (The parties have stipulated that the recyclers had a manufacturing cost of only $18,000 each.) Consequently, Tomasetti believed their purported value could only be supported by the success of the Partnerships, i.e., as a function of market demand, and that an investor should therefore have "a strong inclination that this was a viable economic deal." Both Tomasetti and Frabotta testified that they believed the purported value of the Sentinel EPE recycler was supported by the economic projections in the offering materials. Neither Tomasetti nor Frabotta, nor anyone associated with them investigated the merits of those projections. Frabotta did not investigate the market for the Sentinel EPE recycler or inquire as to whether the recycler had any competition. Tomasetti made no independent inquiries or investigation of the recycler or any of the individuals involved. He thought that there was a ready market for the recyclers. As he put it, "I did some due diligence to the extent that I was asked to accompany these individuals to Hyannis, but it wasn't my objective to go down and to try and shake this out, and spend six months of my life trying to learn about the industry".Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Next
Last modified: May 25, 2011