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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
attorney.
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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