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Recycling Associates are partnerships that leased Sentinel
recyclers. Burstein also was a client and business associate of
Elliot I. Miller (Miller), the corporate counsel to PI.
The offering memoranda for Empire, Plymouth, and Foam state
that the general partner will receive fees from those
partnerships in the respective amounts of $35,000, $37,500, and
$25,000.5 In addition, each of the offering memoranda provide
that the general partner may retain as additional compensation
all amounts not paid as sales commissions or offeree/purchaser
representative fees. According to the offering memoranda, 10
percent of the proceeds from each offering ($95,000 in the case
of Empire, $97,500 in the case of Plymouth, and $60,000 in the
case of Foam) was allocated to the payment of sales commissions
and offeree/purchaser representative fees. Consequently, Roberts
was scheduled to receive a minimum of $97,500 and up to a maximum
of $350,000 from the Partnerships.
The offering memoranda list significant business and tax
risk factors associated with investments in the Partnerships.
Specifically, the offering memoranda state: (1) There is a
substantial likelihood of audit by the Internal Revenue Service
5 The Foam limited partnership agreement provided that the
$37,500 fee was "payable ten (10) days after the Closing." The
limited partnership agreements for Empire and Plymouth provided
that the fees of $35,000 and $37,500, respectively, were payable
"ten (10) days after the Sentinel Recyclers are delivered to a
licensee thereof." Such amounts were essentially guaranteed
because FMEC and PI were committed to be licensees of the
recyclers.
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Last modified: May 25, 2011