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and offeree representative fees. In addition, the offering
memoranda list significant business and tax risks associated with
an investment including: (1) A substantial likelihood of an
audit by the Internal Revenue Service (IRS) and that the purchase
price paid by F&G to ECI would probably be challenged as being in
excess of fair market value; (2) that Southeast and Esplanade had
no prior operating history; (3) that Samuel Winer, the general
partner of southeast and Esplanade, had no prior experience in
recycling or similar equipment; (4) that the limited partners had
no control over the conduct of Southeast's and Esplanade's
business; (5) that there was no established market for the
recyclers; (6) that there were no assurances that market prices
for virgin resin would remain at their current costs per pound or
that the recycled pellets would be as marketable as virgin
pellets; and (7) that certain potential conflicts of interest
existed. The value of the Sentinel recyclers was grossly
overstated in the promotional materials.
Stewart read the marketing opinion of Stanley Ulanoff
(Ulanoff), the technical opinion of Samuel Z. Burnstein
(Burnstein), and the tax opinion of John Y. Taggart (Taggart).
Ulanoff owns a 1.27-percent interest in Plymouth Equipment
Associates and a 4.37-percent interest in Taylor Recycling
Associates, both of which leased Sentinel recyclers. Burnstein
owns a 2.605-percent interest in Empire Associates and a 5.82-
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