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The Court next examines petitioners' reliance on the advice
of Mr. Sheets. Mr. Sheets had no background or expertise in
agriculture or jojoba plants. In fact, the only other investment
recommended to petitioners by Mr. Sheets had been a real estate
investment. Also, because Mr. Sheets was a salesperson for this
investment, he had a personal profit motive and, thus, a conflict
of interest in advising petitioners to purchase the limited
partnership interests. The advice petitioners allegedly received
from Mr. Sheets fails as a defense to negligence because of his
lack of competence to give such advice and the clear presence of
a conflict of interest. See Rybak v. Commissioner, 91 T.C. 524,
565 (1988). Petitioners' reliance on the advice of Mr. Sheets
was unreasonable under the circumstances.
Outside of Mr. Meyers and Mr. Sheets, petitioner's sole
inquiry into the viability of this partnership's operations
consisted of a visit to the cosmetics department of a local
supermarket to determine whether, in fact, any women's beauty
products actually contained extracts from the jojoba plant.
Petitioner was apparently satisfied by his discovery that some
women's beauty products did contain jojoba derivatives, and he
made no further investigation. The Court finds it notable that
the offering listed at least 15 "potential uses of jojoba nuts",
only one of which was in certain cosmetics; yet petitioner chose
to explore only one of those potential uses by visiting the
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