Norman H. Fawson and Mary Jane B. Fawson - Page 3

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          one or two investments through Mr. Jones.  As an officer of and             
          participant in the retirement plan sponsored by his medical                 
          partnership (the retirement plan), petitioner also had                      
          participated in other investments recommended and sold by                   
          Mr. Jones.                                                                  
               The partnership was promoted by the CFS Corp. (CFS), through           
          which petitioners and the retirement plan had made several                  
          investments.  CFS was highly recommended by the attorney who                
          oversaw the retirement plan.  Petitioners also had made                     
          investments in real estate limited partnerships through this                
               Petitioners discussed the partnership investment opportunity           
          with Mr. Jones.  In addition to information provided by Mr.                 
          Jones, petitioner had discovered, while investigating drip                  
          irrigation for his apple orchard, that farmers in Israel were               
          already researching jojoba as an alternative source to sperm                
          whale oil and had already started jojoba plantations.  Petitioner           
          also read what he could find at the library to become acquainted            
          with jojoba.                                                                
               Mr. Jones gave petitioners a private placement memorandum              
          which they read and discussed with him.  One of the features of             
          the investment was that it would generate substantial tax                   
          deductions.  The promotional materials petitioners reviewed                 
          indicated that there were tax risks associated with the                     

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