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pay “fees of purchaser representatives and selling commissions”
from the proceeds of the offering in an amount equal to 10
percent of the aggregate price of the units. Thus, Winer would
earn a 10-percent commission upon selling an interest in the
partnership. In addition, the offering memorandum stated that
Winer could “retain as additional compensation all amounts not
paid as purchaser representative fees or sales commissions in
connection with the Offering”.
The face of the offering memorandum warned, in bold capital
letters, that “THIS OFFERING INVOLVES A HIGH DEGREE OF RISK”.
The offering memorandum also warned that “An investment in the
partnership involves a high degree of business and tax risks and
should, therefore, be considered only by persons who have a
substantial net worth and substantial present and anticipated
income and who can afford to lose all of their cash investment
and all or a portion of their anticipated tax benefits.” The
offering memorandum went on to enumerate significant business and
tax risks associated with an investment in Whitman. Among those
risks, the offering memorandum stated: (1) There was a
substantial likelihood of audit by the Internal Revenue Service,
and the purchase price paid by F&G to ECI might be challenged as
being in excess of the fair market value; (2) the partnership had
no prior operating history; (3) the management of the
partnership’s business would be dependent on the services of the
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Last modified: May 25, 2011