- 3 -
Investment in Jojoba Research Partners, Hawaii
In 1982, petitioner’s accountant, Robert Mihara, introduced
petitioner to an investment opportunity in a limited partnership
known as Jojoba Research Partners, Hawaii (Jojoba). Jojoba had
entered into agreements with U.S. Agri-Research and Development
Corp. (Agri-Research) under which Agri-Research would provide
agricultural research and development services with respect to
the growing of jojoba plants. In connection with its activities,
Jojoba planned to deduct research and development expenditures
under section 174, which, it expected, would generate tax
benefits for its investors.
Petitioner believes, but is not certain, that he reviewed a
private placement memorandum (PPM) and a tax opinion letter in
connection with his proposed investment in Jojoba.3 He also
consulted his accountant, Mr. Mihara.
The PPM, dated October 28, 1982, stated: “THIS OFFERING
INVOLVES A HIGH DEGREE OF RISK”. The PPM also stated:
PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO
CONSTRUE THIS MEMORANDUM OR ANY PRIOR OR SUBSEQUENT
COMMUNICATIONS AS CONSTITUTING LEGAL OR TAX ADVICE.
* * * INVESTORS ARE URGED TO CONSULT THEIR OWN COUNSEL
AS TO ALL MATTERS CONCERNING THIS INVESTMENT.
PRIOR TO THE SALE OF ANY UNITS, EACH PURCHASER
AND/OR HIS OFFEREE REPRESENTATIVE SHALL HAVE THE
OPPORTUNITY TO ASK QUESTIONS OF THE GENERAL PARTNER
3Petitioner conceded that, even if he did review the PPM
before making his investment, he probably did not read the entire
document.
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