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partnership had no prior operating history; (4) the limited
partners would have no control over the conduct of the
partnership’s business; (5) there was no established market for
the Sentinel EPS recyclers; (6) there are no assurances that
market prices for virgin resin will remain at their current costs
per pound or that the recycled pellets will be as marketable as
virgin pellets; and (7) certain potential conflicts of interest
exist.
The offering memorandum contained a marketing opinion by
Stanley Ulanoff (Ulanoff) and a technical opinion by Samuel
Burstein (Burstein). Ulanoff owned a 4.37-percent interest in
Taylor Recycling Associates, which purported to lease four
plastic recyclers, and Burstein owned a 5.8-percent interest in
Jefferson Recycling Associates, which also purported to lease
four plastic recyclers. The offering memorandum disclosed that
Burstein was a client of PI’s corporate counsel. The offering
memorandum also warned potential investors not to rely on the
statements and opinions contained in the memorandum, but to
conduct an independent investigation.
C. Partnership-Level Litigation
On March 3, 1989, respondent issued Notices of Final
Partnership Administrative Adjustment (FPAA) to Hamilton’s tax
matters partner (TMP) for 1982, 1983, and 1984. Subsequently, on
March 13, 1989, copies of these FPAA’s were issued to Thornsjo,
Woolf, and Furlong. In the FPAA’s, respondent disallowed the
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