- 24 -
On brief, petitioners painstakingly attempt to dissect
portions of the offering memorandum in an attempt to show that
petitioner carefully perused what he calls a “business plan”.
Petitioners’ piecemeal approach to the offering memorandum ignores
the existence of the strong cautionary language. A careful review
of the offering memorandum, especially the portion discussing the
tax risks, would have caused a prudent investor to question the
propriety of the tax benefits. We would certainly expect no less
from a sophisticated businessman such as petitioner.17
Fourth, petitioners contend that reliance on Mr. Kellen, Mr.
Pace, a professor at the University of California, and Mr.
Maryanov should absolve petitioners of liability for negligence in
this case. We disagree that any such reliance was reasonable;
rather, the record demonstrates that petitioners failed to obtain
competent, independent, professional advice before investing in
San Nicholas.
Petitioners contend that petitioner reasonably relied on
advice from Mr. Kellen. In this regard petitioners argue that Mr.
Kellen was qualified as an expert in jojoba and that he (i.e., Mr.
Kellen) conducted an extensive “analysis” of San Nicholas.
However, the record establishes that Mr. Kellen only became
17 We find it curious that petitioners would emphasize
petitioner’s significant business experience as evidence of due
care. To the contrary, petitioner’s significant business
experience should have caused petitioner to delve deeper into the
nature of his investment.
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011