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Southeast's offering memorandum contains a description of
various business and tax risks associated with an investment.
Despite a review of the offering memorandum, Stewart made no
effort to verify the information contained in the offering
memorandum beyond visiting PI's facilities and discussing the
investment with unknown individuals at PI. While Stewart claims
to have discussed the investment with fellow C.P.A.'s, the
substance and details surrounding any purported discussions are
unclear, and there is no indication that these C.P.A.'s had any
background or experience in the plastics industry. Despite his
lack of knowledge regarding the recycler, the target market for
the recycler, and the technical aspects of the transactions,
Stewart did not contact an expert in plastics recycling or
engineering or recommend that the Gilmores, Wilson, or G&W do so.
Although Stewart visited the PI plant in Hyannis and
observed a demonstration of the recycler, he was not qualified to
analyze or assess the recyclers on display or the facility.
Stewart made no adequate investigation into the value of the
recycler, although an investigation would have revealed the
existence of other plastics recycling machines available in 1981
and 1982 ranging in price from $20,000 to $200,000. See Provizer
v. Commissioner, T.C. Memo. 1992-177. Despite his lack of
special qualifications and professional skills in plastics
engineering, recycling, or materials, Stewart made no effort to
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