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The $112,500 balance (including simple interest at 7 percent per
year) of each limited partner’s $150,000 total subscription fee
per partnership unit was deferred and was stated to be due in
approximately 15 years (namely, in 1994, 1995, and 1996).
On the basis of the number of limited partnership units in
Drake that were sold, the investors in Drake owed Drake the
following stated total amounts:
Cash & Short-Term Purported Recourse
Debt Due In First Long-Term Debt Obligations
3 Years Due In 1994-1996
$13,616,000 $40,849,000
In spite of the large short- and long-term debt obligations
nominally associated with investments in Drake, no credit
investigations were undertaken by Drake with regard to the
creditworthiness of the limited partners who invested in Drake.
On December 29, 1981, petitioner subscribed to 10
partnership units in Drake, and petitioner executed in connection
therewith one promissory note to Drake in the stated principal
amount of $12,500 due on April 15, 1982, and another promissory
note to Drake in the stated principal amount of $25,000 due on
December 15, 1983.
Petitioner did not have any oil or gas experience, did not
conduct any outside investigation of any persons, entities, or
properties mentioned in Drake's offering memorandum, and did not
hire an expert to evaluate the investment. Petitioner did not
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