- 36 -
F.3d (4th Cir. June 23, 1997), affg. T.C. Memo. 1996-167,
and sustaining findings of negligence in a similar transaction.
In contrast, petitioners and their purported adviser did not
have any personal insight or industry know-how in plastics
recycling that would reasonably lead them to believe that the
Plastics Recycling transactions would be economically profitable.
Further, neither Bach nor petitioners consulted or hired any
independent experts in the field of plastic materials or plastics
recycling.5 Instead, they relied upon the offering materials and
representations by insiders to the Plastics Recycling
transactions. We consider petitioners' arguments with respect to
Mollen v. United States, supra, inapplicable under the
circumstances of this case, particularly in light of the opinion
of the Court of Appeals for the Fourth Circuit in Zfass v.
Commissioner, supra.
Petitioners' reliance upon the Court of Appeals for the
Ninth Circuit's partial reversal of our decision in Osterhout v.
Commissioner, T.C. Memo. 1993-251, affd. in part and revd. in
part without published opinion sub nom. Balboa Energy Fund 1981
v. Commissioner, 85 F.3d 634 (9th Cir. 1996), is misplaced. In
Osterhout, we found that certain oil and gas partnerships were
5 Bach testified that he discussed the Plastics Recycling
transactions and visited PI with Gardino, whom he claims had a
technical background. However, Gardino did not testify in this
case, and the record does not show that he was qualified to
analyze the Sentinel EPE recycler or the Plastics Recycling
transactions.
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