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shelter prospectuses for clients who were considering investing
in them. At times he would invest along with his clients because
in his view if “a person didn’t get involved, they did not know
what they were talking about.” Prior to 1982, Schluter had
participated as a general partner of a limited partnership that
owned an apartment house. Prior to 1982, less than 1 percent of
Schluter’s clients’ tax returns ever were audited by the IRS. As
to tax shelters, only one of Schluter’s clients who invested in a
computer leasing transaction was audited before 1982, and this
audit resulted favorably for his client, who received a refund
from the IRS.
In October 1982, Schluter learned about a tax shelter
involving Hamilton when Paul Fitzgerald, a client and former
partner in Schluter’s C.P.A. firm, asked him to review Hamilton’s
private offering memorandum. Schluter reviewed the offering
memorandum and noted that the prospectus was throughly prepared;
it contained a tax opinion from a New York law firm; it included
the marketing opinion of Stanley Ulanoff (Ulanoff) and the
technical opinion of Samuel Burstein (Burstein). Schluter
considered that the financial projections prepared by the C.P.A.
appeared to be reasonable. Schluter never inquired into
Ulanoff’s or Burstein’s background. Schluter also arranged for
his firm’s tax manager, Don Wilson (Wilson), to review the
Hamilton offering memorandum. After reviewing the prospectus and
discussing it with Wilson and Fitzgerald, Schluter concluded that
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