Wayne and Pamela Berry - Page 23




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          was reasonable, petitioners emphasized that Clothier had invested           
          with them in the investments that Clothier had proposed prior to            
          Whitman.  However, petitioners did not claim, nor is there                  
          evidence, that Clothier invested in Whitman.  Apparently,                   
          Clothier’s decision not to invest in Whitman did not dissuade               
          petitioners.                                                                
               Like petitioners, Clothier had no knowledge of the plastics            
          recycling industry.  Moreover, Clothier did not consult with any            
          persons who had expertise in plastics recycling.  Instead,                  
          Clothier’s sources of information about Whitman were limited to             
          the offering memorandum and the representations of insiders.  The           
          only persons with whom Clothier remembers discussing Whitman                
          were:  (1) Margolin, a Whitman sales representative; (2) Connel,            
          a client of Clothier; and (3) either Winer’s attorney or one of             
          the attorneys who wrote the tax opinion of Whitman.  Each of                
          these contacts either had a self-interest in the promotion of               
          Whitman or had no knowledge about the plastics recycling                    
          industry.                                                                   
               Clothier’s reliance on Margolin was unreasonable.  Clothier            
          remembers Margolin telling him that Whitman was a reasonable                
          investment and that it had tax shelter advantages.  These                   
          conclusory remarks, without further investigation, were not a               
          proper basis for reliance, especially since there is no evidence            
          that Margolin had any expertise with plastics recycling although            






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