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the entire document and the supporting documents.” After
petitioner reviewed the offering materials and discussed the
investment with his partners Cohen and Lewin, petitioner decided
to purchase a quarter unit in SAB Resource for $12,500.6
Petitioner had no experience with the plastics materials or the
plastics recycling industry.
On January 14, 1982, petitioner received a letter from SAB
Management, as general partner of SAB Resource, signed by Becker,
stating that the transaction contemplated by SAB Resource was
complete and distributing a modest initial royalty. On June 7,
1982, SAB Management sent a memo to the limited partners,
including petitioner purporting to update the status of his
investment in SAB Resource.
In 1982, Becker retained petitioner again, but this time to
advise him for his own protection relating to SAB Foam.
Petitioner performed a review of the memorandum as he had with
the offering materials for SAB Resource. He also met with
Becker, Boylan & Evans, and Miller to review the memorandum,
according to his testimony, “line by line, point by point”.
According to the Schedule K-1 issued by SAB Foam to petitioner
6 Petitioner testifies that he invested $12,500 in SAB
Resource, but his 1981 Form 1040X, Amended U.S. Individual Income
Tax Return, shows a reversal of the deduction of his share of the
operating loss ($19,548) and investment tax credit ($41,268)
relating to SAB Resource. These figures indicate a $25,000
investment, a half-unit investment, in SAB Resource.
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