David and Ira Kaye Kessel - Page 4




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          Financial Services (CFS).  CFS was involved with Utah I as well             
          as some other endeavors.  Petitioner assumed Mr. Jones received a           
          commission on every transaction he did for petitioner.                      
          Petitioner did not know whether Mr. Jones had a college education           
          or a background in agriculture or research and development                  
          endeavors.                                                                  
               For 2 or 3 years prior to petitioners' investment in Utah I,           
          Mr. Jones acted as financial manager and adviser on investments             
          for petitioner's medical practice pension plan.  Mr. Jones                  
          advised petitioner to invest in stocks, bonds, and mutual funds,            
          as well as in CFS investments.  One of the CFS investments was in           
          a real estate investment trust.  Mr. Jones also prepared an                 
          estate plan for petitioners and showed them how their investments           
          would grow.  Petitioners received a rate of return between 10 and           
          20 percent on their investments during the first 2 or 3 years               
          while using Mr. Jones as their financial adviser.  Petitioner               
          considered Mr. Jones a trusted adviser who gave sound advice.               
               Mr. Jones approached petitioner in early November 1982 about           
          the investment in Utah I.  Petitioner was aware that there was a            
          substantial tax advantage from the Utah I investment in the first           
          year.  Petitioner did not read the materials provided by the                
          partnership very carefully.  He read an article about jojoba that           
          explained that there were many potential uses for it, that the              







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