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Addington also understood that the success of the Partnerships
did not depend upon Roberts' personal efforts.
Maxfield knew that Roberts did not have "the capacity to
seek out end-users" for the recyclers. The offering memoranda
warned that the general partner had no prior experience in
marketing recycling or similar equipment and that,
the Partnership Agreement does not prohibit the General
Partner from engaging in any activity whatsoever,
including those which may be competitive with the
business of the Partnership, and [such] Agreement
requires the general partner to devote only such time
to the business of the partnership as he, in his
absolute discretion, deems necessary * * *
The offering memoranda also noted that Roberts would not be
liable to the Partnerships or the limited partners for errors in
judgment or other acts or omissions not amounting to fraud or
gross negligence. Roberts' "economic incentive" in the success
of the Partnerships, if any, derived from a 1-percent interest in
all items of income, gain, deduction, loss, and credit from the
Partnerships (for his respective $1,000 contributions). However,
regardless of how the Partnerships fared, Roberts was due to
receive a minimum of $97,500, and up to a maximum of $350,000,
from the three offerings.
To learn about the Sentinel recyclers, including how they
functioned, their potential market, and their fair market value,
Maxfield reviewed the offering memoranda and the reports by
Ulanoff and Burstein, spoke to Roberts, and visited PI in 1982.
One of Maxfield's concerns was whether it "was a hard sell to get
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