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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. Petitioner’s 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 petitioner’s purported reliance on
the materials in the memorandum, as well as his advisers, does
not relieve him of liability for the additions to tax for
negligence. Petitioner argues that he is different from the
numerous other investors who have negligently speculated on the
Plastics Recycling deal because he or his friends had a special
relationship with either Becker or Miller. As explained below,
we consider this argument to be contrary to the facts of this
case and wholly unpersuasive.
A. The Memorandum and Petitioner’s Colleagues
1. The Memorandum
Petitioner contends that before purchasing shares in SAB
Foam he read the memorandum and its accompanying materials. The
purported value of the recyclers is what generated the deductions
and credits. The memorandum clearly reflects this circumstance.
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