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Petitioners had no legal or agricultural background or
training; yet, they consulted no source of such information prior
to investing more than $30,000 in Blythe II. Petitioners contend
that, based on the amount of money they were investing in Blythe
II, they couldn't justify spending additional funds to research
the partnership and its proposed activities. Petitioners argue
further that they didn't know where or how to find an appropriate
expert to examine the investment. On the contrary, the Court
believes that, at a minimum, petitioners could have contacted an
attorney to review the offering, provide legal advice surrounding
the partnership, and explain the legal ramifications of the
licensing agreement canceling out the R & D agreement. A
reasonable and ordinarily prudent investor under the
circumstances would have consulted an attorney.
Additionally, the Court does not believe that petitioners
would have experienced a great degree of difficulty or incurred a
great deal of expense in contacting the agricultural department
of a nearby college or university or going to another reliable
source to inquire about the research and development of jojoba
plants and their potential commercial usage, if any. Again, a
reasonable and ordinarily prudent investor would have at least
attempted to make this type of inquiry under the circumstances.9
9In Utah Jojoba I Research v. Commissioner, T.C. Memo. 1998-
(continued...)
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