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enthusiastic about what she thought would be an environmentally
conscious investment.
Petitioners issued a $5,000 check in Mr. Kipness' name
leaving him to take care of any remaining details. Mr. Kipness
invested petitioners' $5,000 in a partnership known as D L & K
Associates, making Mr. Dyckman a limited partner in that
partnership. Petitioners were not provided with any literature,
such as an offering letter or prospectus, regarding their
investment.
Because they were unsophisticated in financial matters,
petitioners did not inquire much about their investment. Mr.
Kipness simply told petitioners that they were investing in some
sort of "waste management" or "recycling" venture, that any
possible loss would be limited to their investment, and that
their short-term profit potential would be limited, but that in
the long run their investment could be highly profitable.
Petitioners expected to receive literature regarding their
investment at some future time. When such information was not
forthcoming, petitioners contacted Mr. Kipness a few months later
and inquired regarding their investment and its status.
Subsequently, petitioners were informed that petitioners'
investment had been a "bust". Petitioners were devastated to
lose their investment, and they did not thereafter make any
similar investments.
Unbeknownst to petitioners, their investment was in a
partnership formed chiefly to produce tax benefits. D L & K
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