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Petitioner states that the accountant assured petitioner that it
was a proper investment. Mr. Shriver, however, was connected
with Mr. Chalich and was a part of the Professional organization,
and he was referred to in Professional's advertising or
promotional brochure. Professional earned commissions or income
on the sale of shelter investments to its clients. In order to
invest, petitioner and Sally Upchurch borrowed $14,000 secured by
a second mortgage on their residence. The loan, however, was at
least $3,000 less than the refunds and/or tax reductions
generated by the energy-device transaction.
Petitioner and Sally Upchurch entered into an agreement with
Professional on June 8, 1983. For a $1,500 fee, Professional was
to assist petitioner in developing a financial plan, which
included consultation on ways to increase capital. In addition,
Professional was to provide a 1-hour conference with a lawyer and
another with an accountant. There is no indication whether the
fee was paid or the services performed, other than the
consultations with Mr. Shriver, the accountant.
Petitioner and Sally Upchurch acquired a 16.667-percent
interest in Evergreen, which, in turn, was to hold an interest in
an energy-saving device. Petitioner's understanding of the
transaction was that an interest in the energy device would be
purchased by the investors, through Evergreen, which would lease
the device to a user who would save on energy. He did not expect
a profit in the early years of the energy device's operation
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