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purchase of an interest in the partnership.
Before making a decision, petitioner asked Winer to send a
copy of the offering memorandum to petitioner’s brother.
Subsequently, petitioner telephoned his brother and, assuming
that his brother had read the offering memorandum, asked some
questions about making the investment. After petitioner’s
brother “didn’t raise any objections to it”, petitioner decided
to invest.
In or about October 1982, petitioner signed a subscription
agreement and purchased three-tenths of a limited partnership
unit (a 1.66 percent interest) in Whitman for $15,000.
Petitioner did not, before signing the subscription
agreement and investing in Whitman, seek the advice of any expert
in the plastics recycling industry, nor did he talk to anyone
involved in the plastics recycling industry. Likewise,
petitioner did not make any independent investigation of the fair
market value of the Sentinel EPS recycler; rather, he accepted,
and did not question, the $1,750,000 per machine value as
represented in the offering memorandum.
Petitioner was influenced to sign the subscription agreement
by Winer and petitioner’s brother. However, Winer did not have
an engineering background, and he was not an expert in either
plastics materials or plastics recycling. Moreover, Winer did
not represent that he possessed specialized knowledge of the
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