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cost of computers at the time the recyclers appeared to be
reasonably priced. In his testimony, Schluter did not explain
how the cost of computers is related to the value of the
recyclers.
Schluter acknowledges that he does not have any education or
experience in the plastics or plastics recycling industries.
Despite this lack of expertise, Schluter contends that he
believed that Hamilton was a good investment because plastic is a
byproduct of oil and in the early 1980’s oil was in limited
production. Schluter also believed that as a result of
increasing oil prices the price per pound of recycled plastics
would be increasing. Sometime during 1982, Schluter advised
Thornsjo, Woolf, and Furlong to invest in Hamilton. At this
time, Schluter also explained to Thornsjo, Woolf, and Furlong
that Hamilton was a tax shelter. In his words: “They knew it
was a tax shelter.”
Subsequently, Schluter reviewed Hamilton’s 1982 financial
statements. In 1983, Schluter learned that Hamilton, as well as
other plastics recycling partnerships, were being audited by the
IRS. Sometime thereafter, Schluter contacted the accounting firm
that represented Hamilton during the audit. Schluter asserts
that Hamilton’s accountants told him that the IRS reviewed the
partnership’s records and completed their work without comment.
On August 13, 1983, Schluter read a Wall Street Journal
(WSJ) article that reported that the plastics recycling promoters
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