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in Sunbelt, he instructed Winer to pay the commission to
petitioners.
When he recommended Sunbelt to petitioner, Storey advised
petitioner that he was planning to invest in Sunbelt, described
his "investigation" into Sunbelt, and provided him with the
offering memorandum for Sunbelt. Storey also advised petitioner
to read the offering memorandum to determine for himself whether
an investment in Sunbelt would result in an economic return.
Petitioner thoroughly reviewed the offering memorandum. During
this review, petitioner noticed that the offering memorandum
advised the potential investor to closely review the offering
memorandum to be satisfied as to the feasibility of the
investment and that the investment would generate the advertised
tax credits.
The offering memorandum allocates 10 percent of the proceeds
from each offering to the payment of sales commissions and
offeree representative fees. In addition, the offering
memorandum lists significant business and tax risks associated
with an investment in Sunbelt including: (1) A substantial
likelihood of an audit by the Internal Revenue Service (IRS) and
that the purchase price paid by F&G Corp. to ECI Corp. would
probably be challenged as being in excess of fair market value;
(2) that Sunbelt had no prior operating history; (3) that Winer
had no prior experience in marketing, recycling, or similar
equipment; (4) that the limited partners had no control over the
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Last modified: May 25, 2011