Don L. and Lora Christensen - Page 3




                                        - 3 -                                         

               During 1982, Mr. Sheets approached petitioner about                    
          investing in Blythe II, which was being promoted as an                      
          agricultural research and development partnership.  Blythe II was           
          the first agricultural type investment opportunity that had been            
          proposed by Mr. Sheets for consideration by petitioner.  Mr.                
          Sheets provided petitioner with a fairly voluminous private                 
          placement memorandum2 (the offering), which described the                   
          proposed investment in and the activities to be conducted through           
          Blythe II.  Petitioner reviewed the document and then passed                
          along the offering to his certified public accountant, Clarence             
          Hulse (Mr. Hulse), who routinely reviewed petitioner's other                
          investment opportunities.  After perusing the offering, Mr. Hulse           
          advised petitioner that the "risk reward" appeared to justify an            
          investment in Blythe II.  Petitioner did not consult an attorney            
          or any independent expert in the area of agriculture or jojoba              
          plants regarding whether jojoba oil or any other jojoba                     
          derivative had a potentially lucrative commercial market.                   
          Petitioners, nevertheless, invested in Blythe II.                           
               On their joint 1982 Federal income tax return, petitioners             
          reported wages of $506,767.52 from petitioner's medical practice,           
          interest income of $46,572.78, taxable dividend income of                   
          $712.30, capital gains of $56,589.02, and other income of                   


               2    The private placement memorandum consisted of some 47             
          pages, plus eight exhibits, and a table of contents.                        





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