Bruce and Lois Zenkel, et al. - Page 33

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          Partnerships was reasonable in light of the so-called oil crisis            
          during the years in issue; and (2) that they reasonably relied              
          upon the offering materials and a qualified adviser.                        
               1.  The So-Called Oil Crisis                                           
               Petitioners argue that they reasonably expected to make an             
          economic profit from the Partnership transactions because plastic           
          is an oil derivative and the United States was experiencing a so-           
          called oil crisis during the years 1981 and 1982.                           
               Petitioners' contention that they reasonably expected an               
          economic profit from the Partnership transactions is                        
          unconvincing.  Petitioners did not give due consideration to the            
          caveats and warnings contained in the offering memoranda, nor               
          seriously investigate or educate themselves in the Plastics                 
          Recycling transactions.  Moreover, testimony by one of                      
          respondent's experts establishes that the oil pricing changes               
          during the late 1970's and early 1980's did not justify                     
          petitioners' claiming excessive investment credits and purported            
          losses based on vastly exaggerated valuations of recycling                  
          machinery.                                                                  
               Petitioners' claim that they reasonably expected an economic           
          profit from the Partnership transactions is undermined by their             
          indifference to the warnings in the offering memoranda and their            
          lack of knowledge regarding the transactions in general,                    
          notwithstanding the so-called oil crisis.  Mrs. Zenkel did not              






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