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Petitioners were not naive investors and should have
recognized the need for independent professional advice. See
LaVerne v. Commissioner, 94 T.C. 637, 652 (1990), affd. without
published opinion 956 F.2d 274 (9th Cir. 1992), affd. in part
without published opinion sub nom. Cowles v. Commissioner, 949
F.2d 401 (10th Cir. 1991); Glassley v. Commissioner, T.C. Memo
1996-206. In fact, the offering cautioned that prospective
investors should not "construe this memorandum or any prior or
subsequent communications as constituting legal or tax advice"
and urged investors to "consult their own counsel as to all
matters concerning this investment." The offering was replete
with statements, including the cover page statement that "THIS
OFFERING INVOLVES A HIGH DEGREE OF RISK", warning of tax risks
involved with the investment and the highly speculative nature of
the commercial viability of the jojoba plant. The offering
contained inconsistent information, such as the statement on page
9 that the general partner "has limited experience in dealing in
Jojoba beans and is mainly relying on the R & D Contractor to
develop technology and plant cultivars over the term of the R & D
Agreement", contrasted with the statement on page 34 that the
9(...continued)
6, the Court noted that there were experimental jojoba
plantations located at the University of California at Riverside,
California, of which the general partner of Blythe II, Mr.
Kellen, was aware.
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