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documents for the Partnerships. Taggert owned a 6.66-percent
interest in a second-tier Plastics Recycling partnership.
Robert Gottsegen (Gottsegen) was a businessman active in the
plastics industry and a long-time business associate of Bambara.
C. The Private Offering Memoranda
Plymouth and Taylor each distributed to potential limited
partners a private placement memorandum. Each offering
memorandum listed significant business and tax risk factors
associated with an investment in the particular partnership.
Specifically, each offering memorandum stated: (1) There was a
substantial likelihood of audit by the Internal Revenue Service
(IRS), and the purchase price paid by F&G to ECI probably would
be challenged as being in excess of fair market value; (2) the
partnership had no prior operating history; (3) the general
partner had no prior experience in marketing recycling or similar
equipment; (4) the limited partners would have no control over
the conduct of the partnership's business; (5) there was no
established market for the Sentinel recyclers; (6) there were no
assurances that market prices for virgin resin would remain at
their current costs per pound or that the recycled pellets would
be as marketable as virgin pellets; and (7) certain potential
conflicts of interest existed.
The private offering memorandum for Plymouth stated that the
projected tax benefits for the initial year of investment for an
investor contributing $50,000 would be investment credits and
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