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media during the late 1970’s and early 1980’s, petitioners have
failed to demonstrate that the so-called energy crisis provided a
reasonable basis for them to invest in Hamilton.
In addition, the taxpayers in Krause were either experienced
in or investigated the oil industry and EOR specifically. One of
the taxpayers in Krause undertook a significant investigation of
the proposed investment, including researching EOR. The other
taxpayer was a geological and mining engineer who hired an
independent expert to review the offering materials. See id. at
166. In the present cases, petitioners did not have any
experience or education in plastics recycling. Moreover, Woolf
and Furlong did not undertake any independent investigation of
the recyclers, and Thornsjo’s cursory inquiries did not amount to
a reasonably thorough investigation, particularly for a person of
his stature and background.
Petitioners next argue that they were not negligent because
they continued to monitor their investments in Hamilton. To
support this argument, petitioners assert that Schluter read a
WSJ article regarding Hamilton, that Schluter read a letter from
Hamilton’s TMP regarding the WSJ article, that they contacted
Schluter with regard to the WSJ article, that they contacted
Schluter with regard to IRS correspondence, and that Schluter
monitored and discussed with them progress reports regarding
Hamilton’s IRS audit. Contrary to petitioners’ arguments, these
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