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offering memorandum. In effect, the advice provided by Grande
and Maki did not suggest anything beyond the view that, if the
facts and circumstances proved to be as represented by Mejia and
in the offering memorandum, then the tax benefits described in
the offering memorandum should be allowed. Keith and Warren did
not rely upon Grande or Maki with regard to Masters’ nontax
business aspects.
Accordingly, petitioners, Grande, and Maki solely relied
upon the offering materials and Mejia’s representations with
regard to the recyclers’ value and Masters’ economic viability.
The offering memorandum contained reports by Ulanoff and
Burstein. Petitioners, Grande, and Maki never investigated
whether Ulanoff or Burstein had an interest in plastics recycling
transactions. In fact, Ulanoff and Burstein each invested in
plastics recycling partnerships. The offering memorandum also
disclosed that Burstein was a client and business associate of
PI’s corporate counsel. Moreover, the offering memorandum
specifically warned potential investors not to rely on the
statements or opinions contained in it. Lastly, as a broker,
Mejia clearly had a financial interest in selling the partnership
interests to petitioners. In this transaction, Mejia was engaged
in a selling function rather than an advisory function, and
petitioners, as experienced businessmen and educated persons,
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