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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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