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transaction satisfied certain tax regulations concerning the
organization’s qualification as a limited partnership so that it
could pass through tax benefits to limited partners. Warren
concedes that his conversations with Maki were limited to tax
issues surrounding Hamilton and not Hamilton’s economic or
financial aspects. Maki did not testify during the trial.
Warren did not invest in Hamilton because partnership
interests were no longer available when he reached his decision
to invest. Then Mejia told Warren that partnership interests in
Masters, another recycling partnership substantially identical to
Hamilton, were available. Accordingly, Warren received the
Masters offering memorandum. Warren did not review the Masters
offering memorandum because it was substantially identical to the
Hamilton offering memorandum. Warren did not undertake any
independent investigation concerning Masters’ economic or
financial aspects. At trial, Warren testified that “the only
thing I had to go on was in the prospectus. And it looked fairly
good.” Warren further testified as to why the Masters prospectus
looked good to him. “Two reasons: One is the relatively
generous tax benefit up front, and that in the long-run, it was
supposed to turn a profit.” Warren further testified that he did
“very little” to monitor his investment in Masters. Warren also
acknowledged that Mejia marketed Masters as a tax shelter.
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