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A law firm named Somers & Altenbach received $583,555
for purported legal services and for agreeing to defend, in
subsequent years, tax benefits that were to be claimed in
connection with the Denver-1981 partnership investments.
The fee of Somers & Altenbach was based on 1-percentage point of
total funds raised by the five Denver-1981 partnerships.
Many of the legal, economic, and technical opinions obtained
by Drake and the other related partnerships relied on unrealistic
and unreliable representations made by individuals who invested
in the partnerships, who were involved in promoting the
partnerships, and who received fees from the partnerships based
on the number of limited partnership units sold.
Petitioner alleges that Drake's lack of participation in the
TexOil tar sands acreage leased to the earlier 1979 and 1980
partnerships is not comparable with investments Drake (and the
other Denver partnerships) allegedly made in later years in
other, unrelated tar sands acreage in Utah. There is no credible
evidence as to how an investment in other tar sands properties
might justify the EOR license fees. Petitioner’s expert, Thomas
Logan, provided no explanation in this regard. There existed no
proven reserves in the various tar sands properties and no proven
methods for recovering commercial quantities of oil from the tar
sands.
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Last modified: May 25, 2011