- 41 -
1. The Private Offering Memoranda
Petitioners each testified that they reviewed a copy of at least
one of the respective offering memoranda.19 Sann claims that he
spent 60 to 70 hours over a 7 to 10 day period studying one.
Addington recalls spending approximately 1 hour perusing one.
Cohn recalls that he spent 3 to 4 hours reviewing one.
Regardless of how much time petitioners may have devoted to the
offering memoranda, however, the records in these cases reveal
that they did not give due consideration to all of the
information set out therein, and that they did not pay sufficient
heed to the warnings and caveats contained therein.
The projected first-year tax benefits in each of the
offering memoranda exceeded petitioners' respective investments.
For each $50,000 investor, the projected first-year tax benefits
for the Partnerships were as follows:
19 It is not clear from the records in these cases whether
petitioners reviewed all three offering memoranda or just the
offering memorandum for Empire or Plymouth.
The offering memoranda and accompanying tax opinions for the
partnerships are substantially similar. WMDI prepared the
offering memoranda and tax opinions for Empire and Plymouth. The
law firm of Boylan & Evans prepared the tax opinion for Foam.
The two name partners of Boylan & Evans, William A. Boylan and
John D. Evans, were partners at WMDI during 1981, but left to
form their own firm in 1982.
The offering memoranda for Empire and Plymouth were included
in the records for docket Nos. 21518-88 and 21519-88 (the Sann
and Addington cases for 1981). Because Cohn did not invest in
Plymouth, only the Empire offering memorandum was included in the
record for his 1981 case, docket No. 4789-89.
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