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reasonable. Both Burstein and Ulanoff held investments in
plastics recycling transactions. The offering memorandum
disclosed that Burstein was a client and business associate of
PI’s corporate counsel.
Petitioner is an attorney who practiced real estate law in a
New York firm during the year in issue. During the course of a
real estate transaction in 1979, petitioner was impressed with
his client’s financial adviser, Harris W. Freedman (Freedman).
After the real estate transaction was completed, petitioner
retained Freedman’s accounting firm, H.W. Freedman & Co., to
prepare his annual tax returns.
In addition to being the named partner in an accounting
firm, Freedman was the president of F&G. In 1982, Freedman sent
petitioner a private placement memorandum for Foam. Petitioner
has no education or work experience in plastics recycling or
plastics materials. Petitioner discussed the investment with
Freedman. He read the offering memorandum and reviewed it with
Jake Jacobson (Jacobson), his tax return preparer from H.W.
Freedman & Co. He also discussed the transaction with one of the
associates in the tax department of petitioner’s law firm. The
associate told petitioner that he “might have a supportable tax
position”.
After reviewing the offering memorandum with petitioner,
Jacobson came to petitioner’s office and told him that he had
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