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advisers purportedly relied upon by the taxpayer knew anything
about the nontax business aspects of the contemplated venture.
See David v. Commissioner, supra; Goldman v. Commissioner, supra.
Petitioners primarily contend that they were not negligent
because they reasonably relied on the memorandum and their
advisers. Petitioner had no education or experience in plastics
materials or plastics recycling, nor had he seen a Sentinel EPS
recycler, when he invested in SAB Foam. Moreover, he did not
consult with anyone who had such expertise in plastics or
plastics recycling. The memorandum was essentially a sales-
oriented document, and it contained numerous warnings that
prospective investors should not rely on it. Petitioners’
advisers either lacked knowledge about the subject of the
proposed investment or were part of the sales group and therefore
inherently and obviously unreliable. Under the circumstances of
this case petitioners’ purported reliance on the materials in the
memorandum, as well as their advisers, does not relieve them of
liability for the additions to tax for negligence. Petitioners
argue that they are different from the numerous other investors
who have negligently speculated on the Plastics Recycling deal
because they or their friends had a special relationship with
Becker or Miller. As explained below, we consider this argument
to be contrary to the facts of this case and wholly unpersuasive.
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