Bruce and Lois Zenkel, et al. - Page 51

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          not establish that the Zenkels' purported reliance on Steele was            
          reasonable, in good faith, or based upon full disclosure.                   
               3.  The Private Offering Memoranda                                     
               In addition to purportedly relying on Becker, Steele, and/or           
          Sprague, petitioners maintain that they reasonably relied upon              
          the offering memoranda and the tax opinion letter appended                  
          thereto.  However, petitioners' testimony and actions indicate              
          that they did not thoroughly review or study all of the                     
          information set out in the offering memoranda and that they                 
          ultimately did not place a great deal of reliance, if any, on the           
          representations therein.                                                    
               The offering memoranda included numerous caveats and                   
          warnings with respect to the Partnerships, including:  (1) The              
          substantial likelihood of audit by the IRS and a likely challenge           
          of the purported value of the recyclers; (2) the general                    
          partners' lack of experience in marketing recycling or similar              
          equipment; (3) the lack of an established market for the                    
          recyclers; and (4) uncertainties regarding the market prices for            
          virgin resin and the possibility that recycled pellets would not            
          be as marketable as virgin pellets.  In addition, the offering              
          memoranda noted a number of conflicts of interest, including                
          Miller's interest in F & G Corp. and his representation of                  
          Burstein, PI, and Grant, who was the sole shareholder of ECI                
          Corp.  A careful consideration of the materials in the respective           






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