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2. The So-Called Oil Crisis
Petitioners testified that they reasonably expected to make
an economic profit from the Partnership transactions because
plastic is an oil derivative and the United States was
experiencing a so-called oil crisis when they invested in the
Partnerships. Based upon our review of the records, we find
petitioners' claims unconvincing, regardless of the so-called oil
crisis. Moreover, persuasive testimony by one of respondent's
experts establishes that the oil pricing changes during the late
1970's and early 1980's did not justify petitioners' claiming
excessive investment credits and purported losses based on vastly
exaggerated valuations of recycling machinery.
Petitioners did not educate themselves in, or personally
investigate, the business aspects of the Plastics Recycling
transactions. Nor did they attempt to resolve the numerous
business-related caveats and warnings in the offering memoranda.
Petitioners purport to have relied on Maxfield, but Maxfield made
it clear to all concerned that he was not an investment analyst
and that he had no training to decide whether the price of oil
was going to increase or decrease. Maxfield also told the
members of Sann & Howe that he considered the relationship
between the potential value of the recycled pellets and the price
of oil to be a negative aspect of the proposed investment. In
addition, petitioners received progress reports with respect to
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