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the Davids' claimed operating loss and credits related to SAB
Recycling.
David learned of the Plastics Recycling transactions and SAB
Recycling from Becker in late 1981 or 1982. He first met Becker
sometime in 1963 when David was general counsel for Perfect Photo
Co. (PPC) and Becker did tax work for PPC on behalf of Touche,
Ross & Co. From 1968 until 1984, Becker provided David with
personal tax advice and performed tax accounting work for
companies that David controlled. David spent 4 to 6 hours
reviewing the offering memorandum for SAB Recycling and
thereafter he discussed the investment with Becker. Becker
described his investigation of the Plastics Recycling transaction
to David in detail.
David has no education or experience in plastics materials
or plastics recycling, and he knew that Becker was not an expert
in the plastics industry. He did not discuss the investment with
anyone who was knowledgeable or expert in the plastics industry.
He never viewed a recycler or independently investigated PI.
David did not investigate whether there was a market for recycled
pellets or independently verify any of the representations in the
offering memorandum. He simply reviewed the SAB Recycling
offering memorandum and discussed the proposed investment with
Becker.
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