- 27 -
Schluter also made an unconvincing statement that he
believed that Hamilton would be economically profitable because
plastic is an oil derivative. At trial, Schluter failed to
explain adequately how the so-called oil crisis provided a
reasonable basis to invest in Hamilton. Schluter also failed to
explain away the numerous business-related caveats and warnings
in the offering memorandum. Contrary to Schluter’s contention,
the offering memorandum warned that there could be no assurances
that the price of new resin pellets would remain at their then-
current level. Schluter also failed to consult with an
independent consultant who had knowledge about plastics or
plastics recycling to ascertain the business aspects of the
Hamilton transaction.
Prior to 1982, Schluter was fully aware of the concept and
practical effect of tax shelters. From 1964 to his retirement in
1991, Schluter was involved with the preparation and marketing of
tax shelters. During the 1980's besides the media coverage of
the so-called oil crisis there was “extensive continuing press
coverage of questionable tax shelter plans.” Zmuda v.
Commissioner, 731 F.2d 1417, 1422 (9th Cir. 1984), affg. 79 T.C.
714 (1982).
Under these circumstances, we are convinced that Schluter
was not concerned with Hamilton’s economic or business aspects.
Rather, we find that Schluter understood and marketed Hamilton as
Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 NextLast modified: May 25, 2011